Fowler v. Lac Minerals (Usa), LLC

694 F.3d 930 (8th Cir. 2012)

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Nature of the Case

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Facts

Viable and D's predecessor company, St. Joe American Corporation, entered into a joint venture agreement in 1984 with the goal of developing certain mining prospects. Viable deeded 90 mining claims involving approximately 944 acres of land to D. In the deed, Viable reserved a right 'to obtain a reconveyance in the property . . . as specified in' an amended joint venture agreement. As part of the agreement D in its sole discretion determine that certain portions of the Property have little potential for containing minerals of economic value or will not be required for mineral development or mining facilities. Upon annual review, D may eliminate such portions of the Property from the terms of this Agreement, and in such event, D will reassign any such portions to Viable. In 1992, state mining regulators issued a 'stop order' for all mining operations on the property because of problems with acid drainage. There is no dispute that, as a result of the 'stop order,' no mineral exploration has occurred since 1993. P succeeded to Viable's rights in the property in November 1999. P formally requested the release of land not being used for mining purposes. D never released any land. In 2008, P sued (1) for a declaratory judgment that D was obligated to reassign any portion of the property that became unneeded for mining or reclamation efforts, (2) for specific performance of that obligation with respect to portions currently not needed, and (3) to quiet title for such portions. D counterclaimed for a declaratory judgment that it owned the 944 acres absolutely. The district court concluded that LAC held the property in fee simple subject to a condition subsequent requiring it 'to reassign the property back to' P 'when the mining deed's purposes are exhausted.' The court found that the transfer of Viable's reversionary rights to P was not precluded by state law which says that a mere right of reentry, or of repossession for breach of a condition subsequent, cannot be transferred to anyone except the owner of the property affected thereby, because the deeds and RJVA established a covenant running with the land, rather than a 'mere' right of reentry. The district court held that D had 'acted in good faith in its decision to not release any of the lands and that D was not required to release any of the land at that time. D appealed. D contends that (i) section 4.3 of the agreement did not create a condition subsequent, but rather a contractual covenant for which damages would be the only remedy for breach. D also contends that Viable was precluded from transferring its associated rights by state statute. D also contends that any rights P might have had are a nullity because mineral exploration ended in 1993.