United States v. Marin Rock and Asphalt Company

• Citation: 296 F. Supp. 1213
• Decision Date: 07 February 1969
• Docket Number: Civ. No. 68-1716.
• Parties: UNITED STATES of America, Plaintiff, v. MARIN ROCK AND ASPHALT COMPANY, Inc.; Robert K. Foster and Florence M. Foster, Defendants.
• Court: U.S. District Court — Central District of California

296 F. Supp. 1213

UNITED STATES of America, Plaintiff, v. MARIN ROCK AND ASPHALT COMPANY, Inc.; Robert K. Foster and Florence M. Foster, Defendants.

Civ. No. 68-1716.

United States District Court C. D. California.

February 7, 1969.

Wm. Matthew Byrne, Jr., U. S. Atty., Ernestine Tolin, Asst. U. S. Atty., Lands Division, Los Angeles, Cal., for plaintiff.

Milton Wichner, Los Angeles, Cal., for defendant.

IRVING HILL, District Judge.

It is necessary to state the facts of this case rather fully before dealing with the instant motion. The facts are not in dispute. Most of the important facts are set forth in the pleadings. Some additional facts were conceded at the oral argument of the instant motion.

The Defendants in the instant action are Marin Rock and Asphalt Company, Inc. (hereinafter called "Marin") and Robert K. Foster and Florence M. Foster (hereinafter collectively called "Foster", or "the Fosters"). In the action the government sues as landowner for damages for trespass on its land. It seeks damages against each Defendant in the amount of $7,162.50 plus interest and costs. The alleged damages result from the removal of sand and gravel from the land in question. The Fosters (and others to whose interest they eventually succeeded) were locators, i. e. purported owners, of mining claims on government land located in Imperial County, California. As a result of litigation tried in this court before another judge, their mining claims were held to be invalid. That action is entitled Foster v. Jensen et al., DC, 296 F.Supp. 1348, and the judgment therein has now become final. Before that judgment was entered, the Fosters spent money in making the land ready for the extraction of sand and gravel. Most of this money was spent on neighboring lands to procure and to pipe water for the extraction operations on the land in question. Whether any of the money was spent on the land in question is not clear. But as will be discussed infra that question is not important. It can be assumed arguendo that the money was spent on the very land in issue.

Apparently the Fosters did not themselves extract anything from the land except twenty tons of Kyanite.¹ In 1960 the Fosters entered a lease with Marin. The lease permitted Marin to remove sand and gravel from the land in question upon payment to the Fosters of a royalty of 2½¢ per ton, which Marin agreed to pay. In addition, Marin agreed to improve the said water well and water piping facilities. Pursuant to the lease, Marin removed 286,500 tons of sand and gravel from the land in question. At the royalty rate of 2½¢ per ton, this equals $7,162.50, the amount of the damages sought herein. Marin admits that it owes the sum of $7,162.50 under its lease with the Fosters and that it has not paid the Fosters that sum. In lieu of paying the Fosters, by agreement between the Defendants, that sum has been deposited in trust for the benefit of the government and the Fosters as their interests may be determined in this action.

It is assumed for the purposes of this opinion that both Defendants were good faith trespassers.

Defendants are represented by the same counsel and filed a single answer bearing a filing date of November 6, 1968. That answer contains, on behalf of Marin alone, what is denominated as a "First, Affirmative and Separate Defense to Plaintiff's Complaint on File Herein as a Cross-Claim Thereto". It alleges that the "direct expenses" of mining the sand and gravel and the cost of producing water for the purpose, exceeded the value of the sand and gravel extracted and were "substantially" in excess of $7,162.50.

The same answer contains, on behalf of Defendant Foster alone, what is denominated a "Second, Affirmative and Separate Defense to Plaintiff's Complaint on File Herein, and as a Cross-Claim Thereto". It alleges that the Fosters' "development expenses" and the cost of sinking a well and producing water for the mining operations were "substantially" in excess of the value of the minerals removed and in excess of $7,162.50.

In their briefs and at the argument, Defendants now call their pleadings "Counter-Claims" rather than "Cross-Claims". By motion filed November 19, 1968, the government seeks to have the aforesaid affirmative defenses and "Cross-Claims" of each Defendant dismissed. The government originally urged two grounds in its motion papers:

1. The pleadings fail to state a defense.

2. The government has not consented to be sued for alleged expenditures of Defendants made while committing an act of trespass on the government's land.

A third ground was added at the oral argument, i. e. Defendants must show compliance with 28 U.S.C. § 2406 and have failed to do so. Section 2406 requires that any defendant in an action brought against him by the United States who seeks to assert therein a "credit" must show that his claim has been disallowed by the General Accounting Office.

The second and third grounds are without merit and can be easily and quickly disposed of. The general principle of law which denies recovery against the government except where sovereign immunity has been waived and the action has been consented to, is not applicable to the instant case on its facts. Nor is 28 U.S.C. § 2406 applicable to the instant case where no affirmative relief is sought by Defendants against the government.

Defendants' position may be analyzed in two different ways, each of which would make inapplicable both the requirement of consent to be sued and § 2406. First, it has been held that where a defendant seeks recoupment by virtue of facts arising from the very transaction which is the subject of the government's action neither the consent rule nor § 2406 applies. United States v. U. S. Fidelity & Guaranty Co., 309 U.S. 506, 60 S.Ct. 653, 84 L.Ed. 894 (1940); United States v. Frank, D.C., 207 F.Supp. 216 (1962); 3 Moore, Federal Practice, 2d Ed. 1948, p. 7, N. 1. That is the situation here.

Secondly, Defendants' pleading may be analyzed as an effort to assert a different legal theory as to the measure of damages than that upon which the complaint is based. Defendants are in essence asserting that under the law governing the measure of damages in such cases, they are permitted to prove amounts expended by them in extracting the sand and gravel to diminish the Plaintiff's recovery. And where the amounts so expended exceed the amount of damages demanded, Defendants contend that the government as Plaintiff is entitled to nothing. On this analysis Defendants are not suing the United States nor are they seeking a "credit" against the United States. They are disputing the legal measure of damages and putting the government on notice of facts which they believe will defeat its recovery if Defendants' view of the law of damages is correct.²

This brings us to a discussion of the remaining ground for the motion, i. e. that the pleading fails to state a defense. I understand this claim to include a contention by the government that the alleged expenditures of Defendants are not cognizable under the legal measure of damages applicable to the case. In this respect the government's position is meritorious and the pleading must therefore be stricken.

At the outset it is necessary to recognize that the liability of a good faith trespasser on government land is governed by the law of the state in which the land is situated. Mason v. United States, 260 U.S. 545, 558, 43 S.Ct. 200, 67 L.Ed. 396 (1923); Standard Oil Co. of California v. United States, 107 F.2d 402, 415 (9th Cir. 1939).

The land in question is in California. But neither counsel has really understood that California state law governs the damage question and neither has done an adequate job of briefing the California law on the subject.

It appears that all of the reported cases involving damages for good faith trespass on United States government lands, have involved the extraction of oil and gas. These cases are Mason v. United States, supra; Standard Oil Co. of California v. United States, supra; United States v. Wyoming, 331 U.S. 440, 67 S. Ct. 1319, 91 L.Ed. 1590 (1947); Jeems Bayou Fishing & Hunting Club v. United States, 260 U.S. 561, 43 S.Ct. 205, 67 L. Ed. 402 (1923); and United States v. Standard Oil Co. of California, 21 F. Supp. 645 (S.D.Cal.1937); aff'd sub nom Standard Oil Co. of California v. United States, supra.

Counsel for both sides have quoted from the above oil and gas cases and relied on them without reference to what state law was being applied and without any attempt to investigate whether the measure of damages in oil and gas trespass cases is the same for other types of cases.

If the instant case involved oil and gas, the expenses incurred by one or both of the Defendants in extracting the substance might well be relevant and the amount of such expenses might have the effect of diminishing the government's recovery against one or both of the Defendants. Many states, including California, have provided that the measure of damages for good faith trespassers who have extracted oil and gas is the value thereof at the time of extraction less all costs of development, operation and production.³

In California this has been adopted as the exclusive measure of damages by statute. California Code of Civil Procedure § 349¾ provides that the measure of damages in such a case shall be the value of the oil or gas at the time of extraction "after deducting all costs of development, operation and production * * *".

Since counsel have cited the oil and gas extraction cases so extensively and seem to rely so heavily on them, it is worth analyzing those cases in some detail. In those cases the Courts have dealt with two types of defendants and two separate problems affecting them. One type of defendant is the oil company which has done the actual extraction while operating under a lease given it by someone it believed to be the rightful owner of the land. The other type of Defendant is the oil...