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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Gold Dust Mines, Inc. v. Little Squaw Gold Mining Company (9/28/2012) sp-6711
Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER .
Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
GOLD DUST MINES, INC., )
DELMER M. ACKELS, and ) Supreme Court Nos. S-13530/13909
GAIL ACKELS, ) (Consolidated)
)
Appellants, ) Superior Court No. 4FA-07-01131 CI
)
v. ) O P I N I O N
)
LITTLE SQUAW GOLD MINING ) No. 6711 - September 28, 2012
COMPANY, )
)
Appellee. )
)
)
GOLD DUST MINES, INC., )
DELMER M. ACKELS, and )
GAIL ACKELS, )
)
Appellants, )
)
v. )
)
LITTLE SQUAW GOLD MINING )
COMPANY, )
)
Appellee. )
_______________________________ )
Appeal from the Superior Court of the State of Alaska,
Fourth Judicial District, Fairbanks, Randy M. Olsen, Judge.
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Appearances: Thomas R. Wickwire, Fairbanks, for
Appellants. Aisha Tinker Bray, Guess & Rudd P.C.,
Fairbanks, for Appellee.
Before: Carpeneti, Chief Justice, Fabe, Winfree, and
Stowers, Justices. [Christen, Justice, not participating.]
CARPENETI, Chief Justice.
I. INTRODUCTION
Two mining companies entered a ten-year mining lease. The lessee was
responsible for mining and prospecting claims owned by the lessor and its president.
The companies entered a holdover tenancy after the expiration of the lease. During this
time, an officer of the lessee company staked mining claims that overlapped with the
claims his company had mined under the ten-year lease. In his own name, that officer
filed location notices for the newly staked claims with the State Department of Natural
Resources. The parties disagreed about who rightfully owned the claims staked during
the holdover tenancy and broke off their lease agreement in October 2003.
In 2007, the former lessor filed suit against the former lessee and its two
officer-shareholders, seeking to quiet title to the disputed mining claims, to eject the
former lessee and its officers from the claims, and to secure damages under several tort
and contract causes of action. The former lessee denied various allegations, raised 13
affirmative defenses, and counterclaimed for the value of labor performed on the claims.
Following a three-week trial, the superior court resolved the dispute in favor of the
former lessor. The former lessee filed two appeals of post-trial orders, which we have
consolidated for decision. We affirm the superior court on all but one issue: Because
specific findings are needed to pierce the corporate veil, we reverse the entry of judgment
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and the award attorney's fees against the wife of the officer of the lessee company and
remand for further proceedings.
II. FACTS AND PROCEEDINGS
A. Background: Mining Laws
This case arises under our state's mining laws. Because the relevant facts
are intimately related to the requirements of state mining statutes, we begin by briefly
describing the legal background of this case:
Under Alaska law, mining rights on state lands are acquired
through the process of "location." This process entails the
discovery [of valuable minerals] and marking of the claim,
the posting of a notice at the claim site, and the recording of
a certificate of location [with the Department of Natural
Resources]. Through location, a locator acquires a mining
claim priority against subsequent locators to the selected
claims.[1]
Although the locator does not have exclusive use of the surface estate of a mining claim,
the locator may exclude other parties from unreasonable uses of the surface estate.2 An
attempted location is void if it overlaps with mining claims held by others.3
The locator of a mining claim, when filing a location notice with the
Department of Natural Resources, gives the claim a name. (Many long-standing mining
claims, including some of the claims in dispute here, have colorful names.) In addition
to its name, each claim can be identified by a unique Alaska Department of Land or
"ADL" number. The names and numbers identify surface estates no greater than 160
1 Moore v. State, Dep't of Natural Res. , 992 P.2d 576, 578 (Alaska 1999)
(citing AS 38.05.195; AS 38.05.210-211; and 11 Alaska Administrative Code (AAC)
86.200-221); see also 11 AAC 86.105 and .200.
2 AS 38.05.255.
3 AS 38.05.245(b).
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acres, and often only 40 acres. Many traditional mining claims are not perfect squares
staked along north-south, east-west lines.
Under the Department of Natural Resources' modern claim-recording
system, the geographic location of a claim is identified by reference to the meridian,
township, range, section, quarter-section, and quarter-quarter-section coordinates of the
public land survey system.4 The MTRSC system requires miners to locate claims along
north-south, east-west lines.5 This system has not extinguished the validity of traditional
mining claims previously recorded under the non-MTRSC system.6 The MTRSC system
was adopted to "improve accuracy, accessibility, and timeliness of [claim location]
data."7 The state's centralized claim-recording system makes it easy to compare the
geographic locations of recorded claims, and if the recorded information is accurate, to
identify overlapping claims.8
4 AS 38.05.195(b)(1)-(2) (authorizing claim-location by reference to
meridian, township, range, and section); see also 11 AAC 86.202 (defining traditional
mining claims and MTRSC (meridian/township/range/section) claims by reference to
AS 38.05.195(b)(1) and (2)).
5 AS 38.05.195(b)(2) ("[T]he boundaries of a claim . . . shall run in the four
cardinal directions unless the claim is a fractional claim or the commissioner determines
that staking in compliance with this paragraph is impractical . . . .").
6 See AS 38.05.195(b) (recognizing claims recorded under MTRSC system
and non-MTRSC claims).
7 Minutes, Sen. Res. Comm. Hearing on S.B. 175, 21st Leg., 2d Sess. (Feb.
21, 2000) (testimony of Steve Borrell, Alaska Miners Assoc. Exec. Dir.).
8 AS 38.05.195(b)(1) provides that, in the event of a conflict over boundaries
for the quarter section or quarter-quarter section, "the corners marked on the ground of
a claim established in accordance with this paragraph and regulations of the
commissioner control."
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In order to maintain a mining claim, the locator must comply with various
statutory requirements. These include making annual rental payments to the state9 and
performing annual labor for the benefit of the claim.10 To satisfy the annual labor
requirement, the claim-holder must submit annually to the Department of Natural
Resources an affidavit attesting to the work performed.11 When work performed in a
given year exceeds the statutory requirement for that year, "the excess value may be
applied against labor required to be done during the subsequent year or years, for as
many as four years."12 The claim-holder may be required to obtain a permit for certain
uses of the surface estate while mining.13 Failure to comply with certain statutory
requirements constitutes abandonment of a mining claim.14 However, in some
circumstances, a claim holder may cure the abandonment that resulted from a failure to
record annual labor or pay rents as required.15
9 AS 38.05.211.
10 AS 38.05.210.
11 11 AAC 86.220(c).
12 AS 38.05.210(a).
13 11 AAC 96.010. Cf. 11 AAC 86.150 (authorizing use of mining plan of
operations instead of permit in some cases).
14 AS 38.05.265(a); see also AU Intern., Inc. v. State, Dep't of Natural Res.,
971 P.2d 1034, 1038 (Alaska 1999) ("[F]ailure to record a statement of annual labor
constitutes abandonment, without regard to intent.").
15 See AS 38.05.265(b); see also 11 AAC 86.125 (substantial rather than strict
compliance authorized by Commissioner on a case-by-case basis).
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In addition to statutes and regulations, mining rights are governed by
longstanding common law and equitable doctrines, including the rules of contract law
governing mining leases.
B. Facts
Little Squaw Gold Mining Company16 is an Alaska corporation that has
held mining claims in the Chandalar mining district since the early 1970s. In 1972, Little
Squaw obtained the rights to various mining claims from Eskil Anderson, who
exchanged these claims for shares of Little Squaw stock and became Little Squaw's
president that year. In the 1980s, Anderson and Hollis Barnett located new claims on
behalf of Little Squaw, including Upper Discovery on Big Creek (ADL 515447),
Number Five Below Upper Discovery on Big Creek (ADL 515452), and Number Two
Above Discovery on Little Squaw Creek (ADL 515445). Around the same time,
Anderson located, in his own name, other claims that he later transferred to Little Squaw,
including Star East Fraction (ADL 515473) and Golden Eagle Fraction. (ADL 515474)
Although these claims were located by Anderson, Little Squaw managed these claims
from discovery onwards.
Gold Dust Mines, Inc. is an Alaska corporation. Its sole shareholders,
directors, and officers are Delmer M. Ackels (Del) and Gail E. Ackels (Gail). (In this
opinion, we use "Gold Dust" to refer to the appellants collectively and "Gold Dust
Mines" to refer to the company.) Del began mining on Gold Dust Creek in the late
1960s and in the Chandalar district in 1989. In 1989, Gold Dust Mines entered into a
ten-year lease with Little Squaw, and Del personally guaranteed the company's
16 During the course of this litigation, Little Squaw Gold Mining Company
changed its name to Goldrich Mining Company. To avoid confusion, we follow the
parties' practice of referring to this company as Little Squaw, the name under which it
had been operating when it filed this action.
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obligations under the lease. Under the terms of the lease, Gold Dust Mines was to mine
and prospect Little Squaw's Chandalar district mining claims and complete the
statutorily required annual labor on those claims. In addition, Gold Dust Mines was
required to pay Little Squaw an annual fee and a percent of royalties on minerals and
metals extracted.
In 1999, Little Squaw managed 112 mining claims in the Chandalar mining
district, including several mining claims relevant to the present dispute. Little Squaw
was required to complete $11,200 of labor to meet the statutory labor requirement on
those claims. That year Del completed $108,000 worth of work on behalf of Little
Squaw, including airstrip and road maintenance, mine-site preparation, stripping,
processing, and reclamation on Little Squaw's claims 7 Below Discovery on Big Creek,
7 Below East on Big Creek, and other unspecified locations on Tobin Creek and Big
Creek. He submitted to the Department of Natural Resources an affidavit describing this
work and listing the 112 mining claims that Little Squaw managed at the time.
In 1999, Gold Dust Mines' compliance with other terms of the lease
faltered. The company failed to make its annual payment to Little Squaw. It also failed
to pay the royalty due on production and state rental payments due on Little Squaw's
claims. Around that time, Del was having financial trouble; he asserts that his mining
business suffered as a result of broken equipment and a dispute with the equipment
dealer. Both Del and Gail filed a petition for personal bankruptcy in February 2000, five
months after the scheduled expiration of Gold Dust Mines and Little Squaw's ten-year
lease. On the bankruptcy petition, Gold Dust Mines was listed among the assets as an
"inactive" company without liabilities or assets. The lease with Little Squaw was listed
under the heading of executory contracts and unexpired leases in which the debtors have
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an interest. Little Squaw was listed as a debtor for the sum of $7,500, the amount of the
lease payment that Gold Dust Mines owed from 1999.
Around 2000, by failing to make statutorily required payments to the state,
Little Squaw abandoned 86 of the mining claims it managed in the Chandalar mining
district. The record strongly suggests that the missed payments and abandonment were
the result of Gold Dust Mines' failure to pay Little Squaw $7,500 due under the lease in
1999.17 Little Squaw and Anderson held on to the remaining 26 mining claims, including
Number Two Above Discovery on Little Squaw Creek (ADL 515445); Upper Discovery
on Big Creek (ADL 515447); Number Five Below Upper Discovery on Big Creek (ADL
515452); Star East Fraction (ADL 515473); and Golden Eagle Fraction (ADL 515474).
In 2000, Little Squaw relied on excess assessment work that Del had performed in 1999
in order to comply with state labor requirements for its 26 claims in the Chandalar
mining district.
Although the parties continued to communicate about the mining claims
through 2003, they dispute whether they renewed the terms of the original lease upon its
expiration in 1999. Gold Dust Mines did not make payments under the lease between
2000 and 2002. However, during this period, Del's mining equipment remained on the
surface of claims that, as Gold Dust Mines' agent, he had mined for Little Squaw. Little
Squaw maintained that Gold Dust Mines and Little Squaw continued to operate under the
terms of the lease in a "holdover tenancy" until October 2003. Del asserted that in 2000
he and Little Squaw were operating under the terms of a separate oral contract, which
17 Some evidence suggests that Anderson, who was unable to testify in 2008
because of dementia, may have lost track of details of Little Squaw's business several
years before this case went to trial while some evidence suggests that Little Squaw may
have deliberately abandoned the claims.
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allowed him to store his equipment on Little Squaw's claims in exchange for performing
annual labor on the claims. A jury ultimately found that a holdover tenancy existed and
that the parties were not operating under the terms of a separate oral contract.
In July 2003, Del recorded with the Department of Natural Resources
location notices for various mining claims he had staked that summer.18 There is evidence
suggesting that all of these claims overlap with the locations that Del had mined for Little
Squaw under their 1989 lease agreement.
In 2003, Richard Walters replaced Eskil Anderson as president of Little
Squaw. Around the same time, Anderson transferred to Little Squaw title to Star East
Fraction and Golden Eagle Fraction, two claims that Little Squaw had managed since the
late 1980s. In September 2003, Walters and Del Ackels had a confrontation at a
Fairbanks restaurant. Shortly thereafter the holdover tenancy was terminated.
In 2003 and 2004, Little Squaw recorded new location notices for mining
claims that overlapped with its previously recognized claims. It identified the relevant
claims as: LSGMC 811 (ADL 641356); LSGMC 910 (ADL 641528); LSGMC 911 (ADL
641529); LSGMC 912 (ADL 641530); LSGMC 1012 (ADL 641540); LSGMC 1117
(ADL 641553); and [2004] No. Two Above Discovery (ADL 645852). After Little Squaw
had re-staked some of its claims, Gold Dust Mines filed amendments to correct errors in
some of its 2003 filings. Three amendment notices changed the recorded locations of
18 These claims included: GDM 1 (ADL 641352), GDM 2 (ADL 641353),
GDM 3 (ADL 641354), GDM 4 (ADL 641355), GDM 5 (ADL 641356), GDM 6 (ADL
641357), GDM 7 (ADL 641358), GDM 8 (ADL 641359), GDM 9 (ADL 641360), GDM
10 (ADL 641361), GDM 11 (ADL 641362), GDM 12 (ADL 641363), GDM 13 (ADL
641364), GDM 14 (ADL 641365), GDM 15 (ADL 641366), GDM 16 (ADL 641367),
and GDM 17 (ADL 641368), LSO 1, LSO 2 (ADL 641349), LSO 3 (ADL 641350),
LSO 4 (ADL 641351).
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GDM 1, GDM 2, and LSO 4; and one corrected a deficiency in the location date of GDM
17.
During the course of this competitive staking, the parties communicated with
employees at the Department of Natural Resources about the validity of the claims and
amendments filed in 2003 and 2004. In September 2003, the Department invited Del to
amend deficient posting dates in the Location Notices for GDM 16 and GDM 17 and
notified him that GDM 17 might conflict with one of Little Squaw's claims (Number 5
Below Upper Discovery; ADL 515452). In the fall of 2008, shortly before the trial to
resolve this dispute began in superior court, the Department of Natural Resources issued
a written determination stating that four Amended Location Notices filed by Del Ackels
for GDM 1, GDM 2, GDM 17, and LSO 4 were invalid.
C. Proceedings
In February 2007, Little Squaw filed suit in superior court alleging that Gold
Dust improperly staked and recorded claims that belonged to Little Squaw. The
complaint presented 16 causes of action including quiet title, removal of clouds on title,
ejectment, trespass, conversion of gold and other personal property, conversion of
information, breach of contract, breach of fiduciary duty, piercing the corporate veil, and
indemnity for liabilities of Gold Dust Mines. In its answer to the complaint, Gold Dust
denied various allegations and raised 13 affirmative defenses including statute of
limitations, forfeiture of mining claims, discharge in bankruptcy, estoppel, laches, unclean
hands, breach of covenant of good faith and fair dealing, and several reasons that the lease
was not enforceable (including lack of consideration and performance excused by
breach). Gold Dust also counterclaimed for $52,000 for assessments that it performed on
claims that Little Squaw abandoned.
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Superior Court Judge Randy M. Olsen resolved some issues on summary
judgment, decided others by directed verdict, and submitted others to a jury. Based on
trial testimony, the court reversed a partial grant of summary judgment that it had issued
earlier in the case concerning Gold Dust Mines' right to stake claims on its own behalf
under the terms of the lease. At trial, Gold Dust attempted to show that by failing to
satisfy statutory requirements in 2000, Little Squaw had abandoned the relevant claims
and had no rights in those claims under the lease. In turn, Gold Dust argued that the lease
was invalid and that it owed Little Squaw no duty to stop from staking claims. At trial,
Little Squaw maintained that it had preserved its rights to the disputed claims, with which
Del and Gold Dust Mines improperly interfered.
After a three-week trial, the case was resolved in Little Squaw's favor.
Using factual determinations made by the jury, the court concluded that Little Squaw was
not time-barred from bringing its claims, recognized Little Squaw's title to the disputed
mining claims, granted judgment to Little Squaw on the ejectment and trespass claims,
dismissed Gold Dust's counterclaims, and authorized Little Squaw to pierce Gold Dust
Mines' corporate veil (thereby holding the Ackelses personally liable) for losses arising
after 2003. These conclusions were summarized in the superior court's written findings
and conclusions of March 20, 2009.
After trial and before the superior court issued its findings of fact and
conclusions of law, Del submitted an application to the Department of Natural Resources
for a five-year permit to mine claims located at Township 31, Range 3 West, Sections 10,
15, and 16. Del traveled to those claims in March 2009 and obtained a copy of the court's
findings and conclusions upon his return to Fairbanks.
Following the entry of the superior court's order, Del applied for another
permit to mine in Fairbanks Meridian, Township 31 North, Range 3 West, Section 28.
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In July 2009, Del traveled to these claims to begin mining them for the season. Little
Squaw believed that Del was mining within the boundaries of its claims and moved for
the superior court's intervention. On July 29, 2009, the superior court issued an Order
in Aid of Final Judgment, which ordered Del off all of Little Squaw's mining claims.
Following his receipt of this order, Del stopped his mining activity.
In November 2009, the superior court held a hearing in which it considered
Little Squaw's motion to hold Del in contempt for refusing to obey court orders.19 The
superior court concluded that "[Del's] explanation [of his 2009 mining activity] is flaky,
but not illegal . . . there's enough wiggle room . . . not to find that he was in contempt of
the court order." At the end of that hearing, the superior court explained that it would
address the issue of reclamation costs resulting from the 2009 mining at another time.
Following a hearing on damages in May 2010, the superior court ordered
Gold Dust Mines and the Ackelses to pay $15,862.24 for the costs of reclaiming the land
Del mined in July 2009. This damages award was based on the superior court's
conclusion that Del's 2009 mining activity took place within the boundaries of Little
Squaw's GRMC 14 and 15 claims, and not within the boundaries of GDM 18. The
superior court entered an enhanced attorney's fees award, naming Little Squaw the
prevailing party.
Gold Dust Mines and Del and Gail Ackels appeal the superior court's
findings and conclusions of March 2009 as well as the post-trial order for damages arising
from the summer 2009 mining activity. We have consolidated these two appeals.
19 A Department of Natural Resources employee had informed Little Squaw's
counsel that the Department would revoke Del's permit to mine if he were held in
contempt for trespassing on Little Squaw's claims.
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III. STANDARD OF REVIEW
This case involves both factual and legal questions. The court's factual
findings20 - such as those concerning credibility and why Del Ackels stopped mining in
2009 - should not be overturned unless they are clearly erroneous.21 In reviewing
questions of law - here, concerning the application of state mining statutes and
regulations - we "adopt the rule of law that is most persuasive in light of precedent,
reason and policy."22
Attorney fee awards are reviewed for abuse of discretion.23 We will not
reverse an award unless it is "manifestly unreasonable."24
IV. DISCUSSION
The issues before us are complicated.25 In the 15-part discussion that
follows, we explain our resolution of each of Gold Dust's arguments. But at the outset,
20 In this case, none of the jury's factual findings as set out in the special
verdict were challenged by Gold Dust.
21 McCormick v. City of Dillingham , 16 P.3d 735, 738 (Alaska 2001).
22 Miscovich v. Tryck , 875 P.2d 1293, 1297 (Alaska 1994) (citing Guin v. Ha,
591 P.2d 1281, 1284, n.6 (Alaska 1979)).
23 Joseph v. Jones , 639 P.2d 1014, 1019 (Alaska 1982).
24 Welcome v. Jennings, 780 P.2d 1039, 1043 (Alaska 1989).
25 They concern the duration and terms of the mining lease, the interpretation
of state mining statutes, the effect of Department of Natural Resources' adjudications,
the equitable doctrines of estoppel and constructive trust, the applicable statute of
limitations, whether the superior court's reversal of its own grant of partial summary
judgment was proper, whether certain issues were tried by consent, whether the enhanced
attorney's fees award was justified, and whether entry of judgment against an officer-
shareholder was proper.
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we note the similarity between this case and Miscovich v. Tryck .26 The equitable
reasoning utilized in that case helps resolve much of the present dispute. In Miscovich ,
we affirmed the application of a constructive trust in an action to quiet title to disputed
mining claims,27 relying on the following rule:
One who has contracted or agreed to perform annual
assessment work on a claim cannot, by relocating it after his
failure to do the work, acquire any interest adverse to that of
the prior claimant. Courts have either held his location void,
or held him to be trustee for the benefit of the prior locator.[28]
That is just what the superior court did in the present case. Based on the jury's finding
that the lease was in operation until October 2003, the superior court concluded that 20
claims Del staked in July 2003 were held in constructive trust for Little Squaw. Based
on our review of the record, we believe the award of best title to Little Squaw was
justified. Evidence in the record suggests all of the claims awarded to Little Squaw
overlapped with locations Gold Dust had mined for Little Squaw under the 1989 lease.
Although the parties here did not give much attention to that case, it was clearly
instructive to the superior court and provides a context for the parties' dispute.
A. The Superior Court Did Not Err In Reversing Its October 3, 2008,
Partial Order Of Summary Judgment.
Gold Dust argues that we should reverse the jury finding that the mining
lease was in operation until October 2003 and reinstate the court's earlier summary
judgment ruling interpreting the contract. According to Gold Dust, the superior court's
decision to reverse its earlier summary judgment ruling more than a week into the trial
26 875 P.2d 1293 (Alaska 1994).
27 Id. at 1299-1300 (quieting title to disputed mining claims).
28 Id. (citing 2 AMERICAN LAW OF MINING , § 38.03[4]).
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was barred by the law of the case doctrine. It seems to further argue that the court's
decision to reverse its earlier ruling was procedurally unsound and resulted in prejudice:
"If Ackels had thought that going to trial on the remaining issues would put the claims
and rights awarded him by summary judgment at risk, he would have weighed the trial
risks differently, altered his settlement position, and perhaps the case would have settled."
Little Squaw defends the superior court's decision to reverse its earlier
summary judgment ruling based on Del's trial testimony. Citing our precedents in West
v. Buchanan29 and Bylers Alaska Wilderness Adventures, Inc. v. City of Kodiak ,30 Little
Squaw contends that the superior court may reconsider a prior ruling that is unreasonable
or untenable. Little Squaw explains that Del's own testimony about the meaning of the
lease prompted the superior court's decision to revisit the contract issue and points out
that Gold Dust failed to raise any objection when the superior court stated its intention to
revisit the earlier ruling.
"The law of the case doctrine in Alaska 'generally requires adherence by
a lower court to an appellate court's decision and generally prohibits reconsideration of
issues which have been adjudicated in an appeal of the case.' "31 But "a superior court
judge's failure to follow an order of a prior superior court judge does not violate the law
of the case doctrine."32 The law of the case doctrine is of limited relevance in evaluating
the superior court's decision to vacate a pre-trial ruling, and it does not apply here.
29 981 P.2d 1065 (Alaska 1999).
30
197 P.3d 199 (Alaska 2008).
31 Id. at 206. (quoting Mogg v. Nat'l Bank of Alaska , 846 P.2d 806, 810
(Alaska 1993)).
32 Id.
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Gold Dust's second argument invokes a more relevant legal concept -
prejudice resulting from party's reliance on a court's earlier ruling. But this argument
also misses the mark. As we explained in West, "it is entirely reasonable for a judge
whose responsibility it is to try a case to reconsider and reverse an earlier ruling if
convinced that that ruling was erroneous."33 We have not before addressed the
circumstances in which a superior court can reverse its own prior ruling, but the policy
applied in West and Byler applies here with equal force; that is, the superior court should
be allowed to reconsider and reverse an earlier ruling if convinced that the earlier ruling
was erroneous.
In this case, the court was compelled to reverse its earlier ruling because Del
testified at trial that any claims he staked under the lease would have been staked for
Little Squaw. The court's earlier interpretation of the contract was untenable in light of
this testimony and at odds with our reasoning in Miscovich . Moreover, the superior
court's decision to reverse its earlier interpretation of the contract still left open the
question of how long the contract was in operation, and the parties litigated this issue
vigorously. Finally, because Gold Dust did not object to the superior court's treatment
of the contract issue at trial, we review this question for plain error.34 We find no plain
error in the superior court's decision. Moreover, we perceive no prejudice to Gold Dust
as a result of the superior court's decision to reverse its earlier summary judgment ruling.
B. Jury Instruction No. 18 Was Not Erroneous.
Gold Dust challenges the superior court's Jury Instruction No. 18 because
it did not require a finding of agreement between the lessor and tenant as to the
33 West, 981 P.2d at 1067 (internal quotation marks and citation omitted).
34 Adams v. State , 261 P.3d 758, 764 (Alaska 2011) (quoting Raphael v. State ,
994 P.2d 1004, 1015 (Alaska 2000)).
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consequences of a lessee continuing in possession after the termination of the lease. And
it argues that whether the lease was in operation after 2000 should not have been
submitted to the jury because Little Squaw was incapable of leasing out claims it had
abandoned. Thus, Gold Dust maintains that there could not have been a meeting of the
minds over whether to extend the lease.
Little Squaw responds that the jury instruction properly stated the law
governing holdover tenancy and points out that Gold Dust failed to object to the
instruction at trial. Little Squaw further contends that it did not abandon any of the
mining claims at issue in this litigation.
In the absence of a proper objection, we "will not review a jury instruction
unless the instruction constitutes plain error."35 Our law on holdover tenancies is quite
clear: "[W]hen a tenant continues in possession, or holds over, beyond the term of a
lease, the landlord has the election of treating him as a trespasser or permitting him to
remain in possession."36 If the landlord chooses to treat the tenant as a holdover, the
landlord may continue to collect rents under the lease.37 Alternatively, if the landlord
elects to treat the tenant as a trespasser, the landlord may evict the tenant and seek
35 Aviation Assocs., Ltd. v. TEMSCO Helicopters, Inc. , 881 P.2d 1127, 1131,
n.7 (Alaska 1994) (defining plain error as a circumstance where the "jury instruction
obviously creates high likelihood that the jury will follow erroneous theory resulting in
miscarriage of justice") (internal quotation marks omitted).
36 Brown v. Music, Inc. , 359 P.2d 295, 297 (Alaska 1961).
37 Id.
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damages for the reasonable value of the use of the premises.38 The landlord, however,
may not choose to pursue both remedies.39
In this case, the court instructed the jury, in relevant part:
If the lessee is a holdover the landlord has two choices of
action:
a. Eviction - the lessor may treat the holdover lessee
as a trespasser and evict him.
b. Creation of periodic tenancy - The landlord in his
sole discretion, may bind the lessee to a new periodic tenancy.
The terms and conditions of the expired lease apply to the new
tenancy. If the original lease was for a term of more than one
year, a year-to-year tenancy results from holding over.
This jury instruction is not plain error; indeed, it provides a clear statement of the
governing law. Because Gold Dust did not object to the instruction, we need not address
the effect of the alleged abandonment on the lease. We find no error.
C. Del Ackels's Personal Bankruptcy Does Not Bar The Operation Of A
Holdover Tenancy.
Gold Dust argues that any obligations under the lease were extinguished
when the Ackelses filed for bankruptcy in 2000. Little Squaw contends that the
bankruptcy order did not extinguish Gold Dust Mines' obligations under the lease
because the company's obligations resulted from its conduct after Del filed the
bankruptcy petition.
38 Id.
39 Id.
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A discharge order from a bankruptcy court prohibits creditors from
collecting prior debts subject to the discharge.40 The bankruptcy code looks to state law
to determine when a corporate entity is a legal person distinct from its shareholders.41
Although we have not specifically considered whether a person filing personal
bankruptcy and a company owned by that person are distinct legal entities, the conclusion
that the individual debtor and a company co-owned by the debtor are distinct flows
directly from the foundations of Alaska corporate law.42
On February 1, 2000, Del and Gail Ackels filed a voluntary petition for
Chapter 7 bankruptcy. Three months later, the U.S. Bankruptcy Court ordered a
discharge "to the person[s] named as the debtor[s]," Delmer M. and Gail E. Ackels.
These bankruptcy proceedings did not discharge the obligations of Gold Dust Mines, a
distinct legal entity. The superior court did not err in concluding that the bankruptcy did
not discharge Gold Dust Mines' debts.
D. The Superior Court Did Not Err In Concluding That Claims Staked By
Del Ackels In 2003 Were Held In Constructive Trust For Little Squaw.
40 See 11 U.S.C. § 524(a) (2006) ("A discharge in a case under this title . . .
voids any judgment at any time obtained, to the extent that such judgment is a
determination of the personal liability of the debtor with respect to any debt discharged
. . . .").
41 See, e.g., In re Blatstein , 192 F.3d 88, 100-01 (3d Cir. 1999) (rejecting
argument to reverse judgment piercing corporate veil under Pennsylvania corporate law
because company co-owned by Chapter 7 bankruptcy debtor was a distinct legal entity
from, and alter ego of, the debtor).
42 Marine Solution Servs., Inc. v. Horton , 70 P.3d 393, 401 (Alaska 2003) ("It
is well-established that the corporate entity is distinct although all or a majority of its
stock is owned by a single individual or corporation, or although the corporation is a
so-called 'family' or 'close' corporation.") (internal citations omitted).
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Gold Dust challenges the superior court's interpretation of the lease in the
companion case, S-13909. It argues that the superior court improperly ruled "that Ackels
was the agent of Little Squaw when he staked and filed his claims in 2003." Little Squaw
again defends the superior court's interpretation of the lease. It argues that any claims Del
staked during the holdover tenancy were staked on behalf of Little Squaw.
A constructive trust is an equitable remedy that becomes available upon
clear and convincing proof that a party holds a property interest "by reason of unjust,
unconscionable, or unlawful means."43 In imposing a constructive trust, the court vests
the ill-begotten property interest in the wronged party.44 A constructive trust is an
appropriate remedy when a mining claim lessee stakes over claims that he is obligated to
maintain for the lessor.45 As noted above, in Miscovich , we held that a party agreeing to
perform annual assessment work cannot, by relocating the claim after failing to do the
work, "acquire any interest adverse to that of the prior claimant."46 In the present case,
the superior court was guided not only by the equitable principles of Miscovich , but by
Del's own testimony about the terms of the lease between Gold Dust and Little Squaw.
At trial Del testified that any claims he staked under the operation of the lease would have
been staked for Little Squaw. On this basis, the superior court concluded that claims Del
43 Riddell v. Edwards , 76 P.3d 847, 852 (Alaska 2003) (quoting McKnight v.
Rice, Hoppner, Brown, & Brunner , 678 P.2d 1330, 1335 (Alaska 1984)). We further
explained that "a constructive trust presupposes a transfer or holding of property in
which the equitable beneficiary has a legal interest and unconscionable conduct by the
property's holder in connection with its acquisition." Id.
44 McKnight , 678 P.2d at 1335.
45 Miscovich v. Tryck , 875 P.2d 1293, 1299 (Alaska 1994).
46 Id. (citing 2 AMERICAN LAW OF MINING , § 38.03[4]).
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staked during the holdover tenancy were held in constructive trust for Little Squaw. We
find no error.
E. The Superior Court Did Not Err In Ruling On The Frustration Of
Purpose Contract Defense.
Gold Dust also seems to argue that the lease could not have been in operation
under the doctrine of frustration of purpose. At trial it proposed a jury instruction on
frustration of purpose, which the superior court declined to use. Little Squaw maintains
that Gold Dust failed to object to the ruling on frustration of purpose and argues that the
court correctly instructed the jury.
We have recognized "frustration or supervening impossibility" as a defense
to enforcement of a contract.47 Under this defense, performance is excused if, without
fault of either party, an implied condition of the contract is not met.48 Frustration of
purpose is applicable where "parties enter into a contract on the assumption that some
particular thing essential to its performance will continue to exist and be available for the
purpose and neither agrees to be responsible for its continued existence and
availability."49
In the present case, neither party suggests that maintaining the validity of the
claims was outside the scope of the parties' agreement. In fact, each party asserts that the
47 Merl F. Thomas Sons, Inc. v. State , 396 P.2d 76, 79 (Alaska 1964).
48 Id. at 78 ("[W]here parties enter into a contract on the assumption that some
particular thing essential to its performance will continue to exist and be available for the
purpose and neither agrees to be responsible for its continued existence and availability,
the contract must be regarded as subject to an implied condition that if, without the fault
of either party, the particular thing ceases to exist or be available for the purpose, the
contract shall be dissolved and the parties excused from performing it.") (quoting
Parrish v. Stratton Cripple Creek Mining & Dev. Co. , 116 F.2d 207, 209-10 (10th Cir.
1940), cert. denied, 312 U.S. 698 (1941)).
49 Parrish , 116 F.2d at 209-10 (emphasis added).
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other failed to satisfy an obligation related to maintaining the premises. Thus, the doctrine
of frustration of purpose does not apply here. We reject Gold Dust's argument that the
lease was ineffective under the frustration of purpose doctrine.
F. The Superior Court Did Not Err In Applying The Ten-Year Statute Of
Limitations To Little Squaw's Claims Of Best Title To The Mining
Claims Staked And Filed During The Lease.
Gold Dust argues that Little Squaw's claim of best title to the mining claims
staked in 2003 is a "bootstrap argument" that depends on the operation of the lease at the
time the claims were staked. According to Gold Dust, the three-year statute of limitations
for contracts bars Little Squaw from asserting best title to the mining claims staked in
2003 because Little Squaw filed suit in February 2007, three years and four months after
the lease was terminated.
Little Squaw defends the superior court's decision to apply the ten-year
statute of limitations for actions involving title to real property. It argues that the statute
of limitations for contracts does not apply because Little Squaw "was not seeking any
damages for the non-payment of rents or royalties during the lease, or the failure to do any
act required under the lease."
In determining which statute of limitations applies, we look to "the nature
of the injury alleged, rather than to the technical cause of action."50 We have also
"expressed a policy of applying the longer of two limitations periods if two limitations
statutes apply to a claim."51 In this case, we must decide between the three-year statute
50 McDowell v. State , 957 P.2d 965, 968 (Alaska 1998) (applying six-year
statute of limitations for trespass rather than two-year statute of limitations for torts).
51 Id .
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of limitations that applies to contract actions52 and the ten-year statute of limitations that
applies to actions to recover real property.53
Had Little Squaw sought contract damages, Gold Dust's argument that the
statute of limitations has expired would be appropriate. But the remedy Little Squaw
seeks is title to its mining claims, not breach-of-contract damages. While the leading
issues changed over the course of the litigation, the claims Little Squaw pursued at trial
and continues to defend on appeal are aptly characterized as claims seeking best title to
the disputed mining claims. Under our precedent, the superior court's decision to apply
the ten-year statute of limitations to these claims was proper.
In addition, we find no error in the superior court's decision to award Little
Squaw damages for trespass, a claim that is subject to a six-year statute of limitations that
has not expired.54 Because no damages were awarded for conversion of gold, we need
not consider whether the proper statute of limitations was applied to that claim.
G. The Superior Court's Ruling On The Department Of Natural
Resources' November 11 Determination Is Not Reversible Error.
Gold Dust argues that the superior court improperly deferred to the 2008
adjudication of the mining claims by the Department of Natural Resources, which
determined that four Amended Location Notices filed by Del were invalid. According
to Gold Dust, the decision was "issued without statutory authority, without notice, or an
52 AS 09.10.053.
53 AS 09.10.030. This provision also suggests that there may be no statute of
limitations for actions to quiet title. AS 09.10.030 ("An action may be brought at any
time . . . in order to (1) quiet title to [] real property; (2) eject a person from that real
property."). Little Squaw's claims would not be barred under any of these provisions,
and this court does not need to determine which of these provisions applies to Little
Squaw's claims.
54 AS 09.10.050.
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opportunity to offer evidence or argument, was not the result of a procedure that provided
due process and was issued after at least two ex parte communications with Little
Squaw." Gold Dust further argues that the particular employee who issued the
adjudication in this case was not authorized to do so, that the opportunity for
administrative appeal of Department of Natural Resources decisions is inadequate to
remedy the injuries of an improper adjudication, and that Little Squaw was not required
to comply with the same administrative requirements as Gold Dust.
Little Squaw contends that the superior court reasonably and justifiably
relied on the Department of Natural Resources' adjudication of the Ackelses'
amendments to their mining claim location notices.
Alaska mining statutes authorize the commissioner of the Department of
Natural Resources to oversee the implementation of the Alaska Land Act.55 This includes
the authority to adjudicate disputed mining-claim amendments, which must be recorded
with the Department.56 The commissioner may delegate this authority to Department
employees as "necessary to carry out the provisions and objectives" of the governing
statute.57 Although these adjudications are not governed by the Alaska Administrative
55 AS 38.05.020.
56 AS 38.05.195-.200; see also Chalovich v. State, Dep't of Natural Res., 104
P.3d 125, 130 (Alaska 2004) (concluding AS 38.05.210 authorizes the Department of
Natural Resources to define the labor year for mining claims); Moore v. State, Dep't of
Natural Res. , 992 P.2d 576, 581 (Alaska 1999) ("Because the commissioner, acting
within his authority, was entitled to find that PRI was . . . not qualified to acquire mining
rights under AS 38.05.190(a), his decision voids and nullifies PRI's mining rights."); AU
Intern., Inc. v. State, Dep't of Natural Res. , 971 P.2d 1034, 1041 (Alaska 1999)
(rejecting due process challenge to Department's determination that 1,035 mining claims
were abandoned by failure to properly file affidavit of annual labor).
57 AS 38.05.020(b)(4).
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Procedures Act,58 the Department's authority is constrained by constitutional and statutory
requirements, as well as by the Department's own regulations and judicial review.59
In this case, the Department of Natural Resources issued a letter on
November 11, 2008, which concluded that four mining-claim amendments filed by Del
were invalid on the ground that they overlapped with Little Squaw's existing claims.60
It is clear from the face of the November 11 letter that ex parte contacts with Little
Squaw's president, Dick Walters, prompted the Department's adjudication of the
amendments in question. These ex parte contacts and the timing of this letter - issued
just over three weeks before trial, more than three years after Del's amendments were
filed - raise serious doubts about the fairness and adequacy of the Department's process
for adjudicating mining-claim disputes. Furthermore, we share Gold Dust's concern that
deference by the superior court to the adjudication in these unusual circumstances would
58 See AS 44.62.330(a) (listing agencies subject to the procedural
requirements of AS 44.62.330-.630); AS 38.05.020 (subjecting regulations, but not
adjudications, of the Department of Natural Resources to the requirements of the
Administrative Procedure Act).
59 See, e.g., AS 38.05.020(b)(1) (requiring that procedures established by the
commissioner be "reasonable [and]. . . necessary to carry out" the statutory mandate);
Moore v. State , 553 P.2d 8, 31 (Alaska 1976) (Rabinowitz, J., concurring) (concluding
"our courts can review the performance of administrative tasks by an executive agent to
ensure compliance with specific procedural safeguards imposed by the legislature in
accordance with Alaska's constitutional mandates"); see also id. at 30 (requiring
compliance with separate opinion of Justice Rabinowitz).
60 The November 11 letter replaced a letter issued by the Department of
Natural Resources on October 29, 2009. The conclusions in both letters are the same and
much of the language in the letters is identical. The only difference between the letters
is that the November 11 letter includes additional information that helps to identify the
claims in dispute (ADL numbers, MTRSC locations, document numbers). To avoid
confusion, we follow the superior court's practice of referring to this as the "November
11" letter.
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have been misplaced. But the superior court here did not defer to the administrative
agency.
As to the first of the four claims in question, GDM 17, Gold Dust's opening
brief states:
The court ruled this letter was a decision of an administrative
agency and adopted its findings before trial began, by
"directed verdict," . . . and told Ackels his remedy was an
administrative appeal. This took GDM #17 from Ackels and
removed Ackels'[s] claim to it from the trial.
But the superior court did not, in fact, remove ownership of GDM 17 from the issues to
be resolved at trial. The court specifically stated, "we'll still go forward with 17 and we'll
see how that shakes out." The parties presented evidence about GDM 17, and halfway
through the trial, the court reiterated its understanding that ownership of GDM 17
remained an issue in dispute. On the special verdict form, the jury specifically found that
Del had not satisfied the statutory requirements for staking and recording that claim. On
the basis of the jury verdict, the superior court granted Little Squaw title to GDM 17.
Because title to GDM 17 was litigated at the trial and properly submitted to the jury, we
find no error in the superior court's decision to award this claim to Little Squaw.
As to the three other parcels that were the subject of the DNR letter - LS0
4, GDM 1, and GDM 2 - Gold Dust was given the opportunity at the outset of trial to
contest the correctness of the agency decision. It indicated that it was not at that time in
a position to do so. The superior court, noting that "[n]ow's the time [for trial]," then
stated that "those [parcels] are not a matter for trial," and that Gold Dust would have to
appeal the agency decision if it believed the decision to be flawed. It is true that the time
between the agency decision and the start of trial was short. But Little Squaw - faced
with the same time limitation - had investigated and was prepared to present evidence
supporting the agency decision, while Gold Dust admitted that it was "not in a position
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to contest." And Gold Dust did not seek a continuance of trial (to allow it either to
present evidence at trial or to appeal the DNR's administrative decision). In these
circumstances, the superior court's decision to allow the uncontested decisions of the
61 62
agency to stand was not error.
H. The Superior Court Did Not Err In Attributing Excess Labor
Performed By Del In 1999 To Little Squaw.
Gold Dust challenges the superior court's ruling that Little Squaw could use
excess labor performed by Del in 1999 in order to satisfy its statutory labor requirements
in subsequent years. Gold Dust argues that when Little Squaw abandoned 86 of its
mining claims around 2000, Little Squaw's remaining 26 claims were no longer adjacent
to or in common ownership with the claims on which labor had been performed.
According to Gold Dust, Little Squaw was not entitled to carry forward excess labor that
had been performed on abandoned claims. Gold Dust may also be arguing, as it did at
trial, that because the affidavit submitted in 1999 did not specifically state that excess
labor would be carried forward, Little Squaw was barred from applying the excess
$96,000 of labor to future years.
Little Squaw defends the superior court's ruling. It argues that Del was
equitably estopped from relying on deficiencies in the affidavit of labor that he submitted
in 1999 because both he and Little Squaw believed that the claims on which Del
61 Judge Olsen noted that Gold Dust had the right to appeal the DNR decision
if it believed it to be erroneous. The record before us shows no such administrative
appeal.
62 We also note that evidence at trial suggested that these three claims (LSO
4, GDM 1, and GDM 2) overlapped with claims that Del mined under Gold Dust Mines'
lease with Little Squaw, including Upper Discovery and Number Two Above Discovery.
If the claims overlap, the Department's administrative decision with respect to them was
correct.
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performed labor were part of a common claim group. Further, Little Squaw argues that
labor performed outside the boundaries of the mining location may qualify as annual labor
if it develops or benefits the location.
As noted above, AS 38.05.210 requires annual labor be performed "on or
for the benefit or development of each mining claim." If adjacent claims are held in
common, labor performed on any of the claims may satisfy the statutory labor
requirement for the other claims.63 Excess labor performed in a given year may be carried
forward for up to four years.64 The owners of these mineral rights must submit annually
to the Department of Natural Resources affidavits attesting to the work performed on their
claims.65 In Ashbrook v. O'Harra ,66 we held that a former mining claim lessee was
equitably estopped from challenging the accuracy of affidavits of labor that he submitted
on behalf of the lessor.67 The superior court applied the same rule in this case. We find
no error.
Insofar as Gold Dust argues that Little Squaw cannot carry forward excess
labor because it did not state its intention to carry forward the excess in 1999, we reject
that argument. Excess labor can be carried forward even where the affidavits submitted
do not include "an express statement that excess labor will be carried over."68
63 AS 38.05.210.
64 11 AAC 86.220(c).
65 Id.
66 581 P.2d 218 (Alaska 1978).
67 Id. at 221.
68 Ashbrook , 581 P.2d at 220.
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I. The Superior Court Did Not Err In Awarding Little Squaw Title To
GDM 16.
Gold Dust argues that the superior court's decision to grant Little Squaw title
to GDM 16 constitutes legal error because this mining claim was neither pleaded in the
complaint nor tried before the jury. Little Squaw responds that GDM 16 was properly
granted to Little Squaw because this claim "was both pled by Little Squaw in its
Complaint and by the Ackles in their Counterclaim, and was actively litigated by both
parties at trial."
We have recognized that issues not raised in the pleadings may be tried by
implied consent of the parties.69 These issues "shall be treated in all respects as if they
had been raised in the pleadings."70
Although GDM 16 was not specifically pleaded in the complaint, that
document did seek "a court order imposing a constructive trust in favor of Little Squaw
on the claims asserted by [Gold Dust]." This appears to refer to all claims staked by Gold
Dust, including GDM 16. In addition, Gold Dust sought to quiet title to GDM 16 in its
counterclaims. The court heard evidence about Del's compliance with the statutory
requirements for staking GDM 16, and Gold Dust's attorney did not object to the
admission of the location notice for GDM 16. Later, the attorney voiced concerns about
submitting claims to the jury that were not in dispute, but after some discussion with the
court, both parties agreed to an open-ended jury instruction, which allowed the jury to list
GDM 16 as an improperly staked claim. On the basis of this jury finding, the superior
court granted Little Squaw title to GDM 16. Because this claim was both generally
69 E.g. , Bevins v. Ballard , 655 P.2d 757, 761 (Alaska 1982).
70 Alaska R. Civ. P. 15(b).
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covered in the pleadings and specifically tried by consent, we find no error in the superior
court's decision to award it to Little Squaw.
J. The Superior Court Did Not Err In Ejecting Del From Little Squaw's
Mining Claims.
Gold Dust challenges the superior court's post-trial ejectment order. It
argues that the superior court improperly "merged the surface estate into the mineral
estate" when it ordered Del off the surface of Little Squaw's claims. According to Gold
Dust, the superior court interfered with the Department of Natural Resources' permitting
process and lacked the authority to do so.71
Little Squaw defends the superior court's ejectment order. Little Squaw
argues that it was entitled to an ejectment order restoring its possession of the disputed
mining claims and that Del continued to interfere with Little Squaw's property rights even
after the superior court awarded Little Squaw title to the disputed claims.
Under Alaska law, a person who acquires mining rights to located claims
also has rights to make use of the corresponding surface estate as "necessary for the
prospecting for, extraction of, or basic processing of minerals."72 The mining claimant's
71 Gold Dust frames this as a question of subject matter jurisdiction, arguing
that the superior court did not have "jurisdiction" over the surface estate, which belongs
to the State of Alaska. This is misguided. "The superior court is the trial court of general
jurisdiction . . . ." AS 22.10.020. Gold Dust does not argue that the superior court is
barred from resolving disputes about the surface estate of mining claims.
Nor does Gold Dust advance a valid personal jurisdiction argument. Gold
Dust suggests that the court should not have issued an order affecting the surface estate
because the state, which retains rights to the surface, was not named a party. This
argument sounds in personal jurisdiction, but it is unavailing. As Little Squaw points
out, the superior court resolved the dispute between Little Squaw, Gold Dust Mines, and
Del, over whom the court "undeniably" had personal jurisdiction.
72 AS 38.05.255.
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rights are "subject to reasonable concurrent uses."73 We recognized in Shope v. Sims74
that the holder of a mining claim may have a claim for ejectment under AS 09.45.630.75
The same holds true today; a mining claimant may recover possession of property by
showing that he has the right to possession of the claim from which he has been
improperly ousted.76
Following the trial in this case, Del applied for a five-year mining permit to
mine claims located at Township 31, Range 3 West, Sections 10, 15, and 16. He traveled
to those claims in March 2009 while the superior court's resolution of the issues litigated
at trial was still pending. While Del was in transit, the superior court issued written
findings and conclusions which stated:
Based on the conclusion that [Little Squaw] is the holder of
best title to its mining claims No.2 Above Discovery on Little
Squaw Creek and Star East Fraction, Golden Eagle Fraction,
Upper Discovery, and No.5 Below Upper Discovery on Big
Creek as well as those claims staked by [the Ackelses] in July
2003, LSQ #2-#4 and GDM #1-#17, [Little Squaw] is entitled
to an order ejecting [the Ackelses] from those claims and
[Little Squaw]'s structures on those mining claims,
specifically including, but not limited to, vacating and
removing all their personal property from the cabin, tool shed,
and all other structures on No.5 Below Upper Discovery. [The
Ackelses] must make prior arrangements with [Little Squaw]
for the removal of their personal property from [Little
Squaw]'s property, the court recognizing that [the Ackelses],
73 Id. ; see also Parker v. Alaska Power Auth., 913 P.2d 1089, 1091 (Alaska
1996) ("The State, as the owner of the surface estate, is permitted to convey all or part
of its interest to other parties and it has done so in this case . . . .").
74 658 P.2d 1336 (Alaska 1983).
75 Id. at 1339.
76 Id.
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along with the public in general, retain the right to use the
airstrips on [Little Squaw]'s mining claims, and has access
across the surface of the claims.
Following the entry of this judgment, Del applied for another permit to mine GDM 18.
In July 2009, Del traveled to these claims to begin mining them for the season. As
addressed further below, the parties disagree about whether Del's July 2009 mining
activity took place within the boundaries of Little Squaw's mining claims. On July 29,
2009, the superior court issued an Order in Aid of Final Judgment, which ordered Del off
all of Little Squaw's mining claims. Following his receipt of this order, Del stopped his
mining activity.
Gold Dust seems to argue that the superior court's order ejecting Del from
Little Squaw's claims was improper because it required him to vacate the surface of the
mining claims. This argument fails. Shope makes clear that a court may order a
trespasser to vacate a mining claim. Moreover, in this case, the superior court's ejectment
order was not overly broad. The post-trial findings and conclusions recognized that Del,
along with the public in general, may access the surface estate in ways that do not
unlawfully or unreasonably interfere with Little Squaw's use of the claim. The later
Order in Aid of Final Judgment was similarly limited to ejecting Del from Little Squaw's
claims. We find no error in the superior court's ejectment orders.
K. The Superior Court Did Not Err In Concluding That Del's 2009 Mining
Activity Took Place Within The Boundaries Of Little Squaw's Mining
Claims.
Gold Dust argues that Del's July 2009 mining took place within the
boundaries of his claim GDM 18 and cannot support the post-judgment award of damages
for reclamation costs. Gold Dust maintains that "there was no dispute over where Ackels
was mining in 2009, (just over how to describe its location)." It argues that because the
only evidence concerning where the GDM 18 stakes were placed was Del's testimony,
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there should be no dispute that the mining took place within the boundaries of GDM 18.
According to Gold Dust, the location of the GDM 18 stakes (not the description in the
GDM 18 Location Notices) controls the boundary determination. It insists that this
question of law - whether the description of the claim controls over the physical
placement of the claim stakes - resolves the appeal of the reclamation damages award.
By contrast, Little Squaw contends that "the issue is truly whether the trial
court['s] finding [concerning the location of] . . . Ackels's undisputed mining activities
in 2009 . . . was clearly erroneous." According to Little Squaw's expert witness, James
C. Barker, Del's 2009 mining took place within the boundaries of Little Squaw's GRMC
14 and 15 and on open state land subsequently staked by Little Squaw as GRMC 30.
Gold Dust concedes that the 2009 mining activity took place where Barker
identified it on photographs. Gold Dust does not specifically concede - nor specifically
deny - that Del's 2009 mining took place in Township 31 North, Range 3 West,
Sections 21 and 28, and it does not offer any definitive statement about where the 2009
mining took place in terms of GPS coordinates or township, range, and section
coordinates. Instead, Gold Dust relies on Del's testimony that all his 2009 mining activity
took place within the boundary marked by his GDM 18 stakes. The closest Del comes
to locating his GDM 18 claim in geographic terms is his testimony that Barker identified
the claim "much farther down the creek" than Del believed it to be. Gold Dust maintains
that because Del had staked his claims 100 feet short, the corner posts of GDM 18 "would
be quite far from the corners of the quarter-quarter section" listed on the Location Notice.
Gold Dust's position that Del's 2009 mining took place within the boundaries of his claim
GDM 18 depends on his testimony about the location of the GDM 18 stakes - testimony
that the superior court specifically discredited.
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Particular deference is due to the superior court's credibility
determinations.77 Even if we accept Gold Dust's legal argument that the physical location
of the stakes controls over the description of the location,78 that alone would not justify
reversing the superior court's damages award. Reversing the superior court's damages
award is justified only if Del had produced definitive evidence of the stake locations that
refuted the information on the GDM 18 claim notice. But Gold Dust did not meet this
burden.
Its evidence fell far short of being definitive. In fact, Del's testimony was
riddled with gaps and inconsistencies about his use of GPS, the geographic location of the
GDM 18 stakes, and his 2009 mining activity. Looking to the record, the superior court
properly resolved a factual dispute about how far downstream the GDM 18 posts were
placed. Its decision to discredit Del's testimony was reasonable and not clearly
erroneous.
Gold Dust's arguments challenging this credibility determination are
misguided. Gold Dust first argues that "there was no dispute on where [Del's] stakes
were." But the portion of the transcript cited supports only the more limited proposition
that Little Squaw did not dispute that GDM 16 and GDM 18 shared corner posts. As the
cited portion of the transcript shows, Little Squaw did indeed dispute "where [the corner
posts] are on the creek." And despite its argument that there is no dispute over the
77 Wasserman v. Bartholomew, 38 P.3d 1162, 1167 (Alaska 2002) (citing
Whitesides v. State, Dep't of Pub. Safety, Div. of Motor Vehicles, 20 P.3d 1130, 1136
(Alaska 2001)).
78 AS 38.05.195(b)(1) provides that, in the event of a conflict over boundaries
for the quarter section or quarter-quarter section, "the corners marked on the ground of
a claim established in accordance with this paragraph and regulations of the
commissioner control." Because this issue has not been briefed, we express no opinion
on the interpretation of this statute.
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location of the corner posts, Gold Dust admits that Little Squaw's expert "located [Del's]
GDM #18 further downstream than where [Del] put his corner." Not only was Del's
testimony about how he staked GDM 18 in relation to GDM 16, how he used the stakes
of other claims and GPS technology to locate his GDM 18 stakes, and the dimensions of
his claims insufficient to directly answer this factual question, but the superior court was
under no obligation to credit his testimony.
Gold Dust also argues that inconsistencies in Del's testimony might have
resulted from "good faith confusion." But of course that does not obligate the superior
court to credit the testimony. In making credibility determinations, the superior court is
not limited to identifying deliberate misrepresentations. The superior court may refuse
to credit testimony based on inaccuracies in a witness's ability to perceive or recall
events. It was within the superior court's discretion in this case to determine whether -
and on what grounds - to disbelieve Del's testimony.
Finally, Gold Dust seems to argue that not every false statement is a lie and
that any false statements made by Del were not "lies." It cites sample pattern jury
instructions for the proposition that honest people may "forget or remember things
incorrectly" and that "inconsistencies and contradictions in a witness' testimony . . . do
not necessarily mean that you should disbelieve the witness."79 But this argument does
not justify reversing the superior court's credibility determination in this case. The
superior court may overlook inconsistencies and contradictions in testimony where the
weight of the evidence counsels the court to do so. And the superior court may focus on
inconsistencies in testimony when the weight of the evidence so counsels. The superior
court did the latter in this case, and Gold Dust offers no justification adequate to reverse
this credibility determination. Because the superior court found no credible evidence that
79 Alaska Civil Pattern Jury Instructions, 1.07 Credibility of Witnesses.
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the GDM 18 stakes were placed outside their recorded location, the contention that Del
mined GDM 18 fails.
L. The Superior Court's Finding That Del Knew He Was On Little
Squaw's Claim In 2009 Was Not Clearly Erroneous.
Gold Dust denies that Del stopped his summer 2009 mining activity because
he knew he was on Little Squaw's claims and challenges the superior court's finding to
that effect. It offers other reasons that Del stopped mining in 2009: (1) because he
believed his mining permit had been invalidated, and (2) in order to retrieve equipment
he had stored on another claim, Number Five Below Discovery.
Little Squaw defends the superior court's finding, noting that Del stopped
mining claims after receiving an order ejecting him from Little Squaw's claims. Little
Squaw argues that the order did not eject him from his own claims and if he had been
mining his own claims, he would not have had to stop.
We will not overturn a factual finding unless that finding is clearly
erroneous.80 The record in this case does not compel us to reverse the superior court's
finding. Del testified that he halted his 2009 mining activity and began moving his
equipment when he received an order stating that Gold Dust was ejected from Little
Squaw's mining claims. This testimony is sufficient to support the superior court's
finding that Del knew that he was on Little Squaw's land. We find no error.
M. The Entry Of Judgment Against Gail Ackels For Reclamation Costs
Caused By The 2009 Mining Activity Was In Error.
Gold Dust argues that Gail Ackels should not be liable for damages arising
from the 2009 mining work, which the superior court concluded took place on Little
Squaw's claims GRMC 14 and 15. It argues that even if Del is liable in damages for
80 See Miscovich v. Tryck, 875 P.2d 1293, 1297 (Alaska 1994); see also
Commercial Recycling Ctr., Ltd. v. Hobbs Indus., Inc., 228 P.3d 93, 98 (Alaska 2010).
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trespassing on Little Squaw's claims in 2009, Gail should be shielded from liability
because her status as Del's wife and her status as a shareholder of Gold Dust Mines, Inc.
are insufficient to support liability.
Little Squaw contends that Gail physically participated in the 2009 mining
activity on GRMC 14 and 15 and can be held liable for any damages arising from that
activity. It points to evidence suggesting that Gail was on the mining claims in 2009 and
shared Del's financial interest in the development of the mining claims.
In a civil case where multiple defendants are held liable, AS 09.17.080
instructs the fact-finder to make findings explaining "the percentage of the total fault that
is allocated to each . . . defendant."81 This statute further instructs the court to "enter
judgment against each party liable on the basis of several liability in accordance with that
party's percentage of fault."82 Under this general rule, a defendant's liability is limited
to its share of the comparative fault.83 Because the superior court did not make the
findings required by AS 09.17.080, we reverse the judgment against Gail and remand for
consideration of such findings.
Because the superior court did not enter comparative fault findings in
accordance with AS 09.17.080, the superior court's decision to enter judgment against
Gail may have been based on its ruling that Little Squaw was entitled to pierce Gold
Dust's corporate veil. Shareholders of a corporation may be liable for corporate debts if
the shareholders control the corporation and abuse the corporate structure to prejudice an
81 AS 09.17.080(a)(2).
82 AS 09.17.080(d).
83 Petrolane Inc. v. Robles , 154 P.3d 1014, 1020 (Alaska 2007).
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opposing party.84 "[T]he corporate veil may be pierced when a corporation is nothing
more than a 'mere instrument' of a shareholder."85 We have identified six primary factors
to consider in imposing personal liability on the shareholder. In applying the mere
instrumentality test, we ask whether
(a) the shareholder sought to be charged owns all or most of
the stock of the corporation; (b) the shareholder has
subscribed to all of the capital stock of the corporation or
otherwise caused its incorporation; (c) the corporation has
grossly inadequate capital; (d) the shareholder uses the
property of the corporation as his own; (e) the directors or
executives of the corporation act independently in the interest
of the corporation or simply take their orders from the
shareholder in the latter's interest; and (f) the formal legal
requirements of the corporation are observed.[86]
"[These] factors help the fact-finder to decide whether the evidence favors piercing the
veil."87 It is not necessary for all six factors to be satisfied before imposing personal
liability.88 "[T]he primary consideration in determining whether to 'pierce the corporate
veil' is whether the corporate form has been abused by the person sought to be charged."89
84 See Klondike Indus. Corp. v. Gibson, 741 P.2d 1161, 1171-72 (Alaska
1987) (upholding trial court's decision to pierce corporate veil).
85 L.D.G., Inc. v. Brown , 211 P.3d 1110, 1125 (Alaska 2009).
86 Id. at 1126.
87 Id.
88 Nerox Power Sys., Inc. v. M-B Contracting Co. , 54 P.3d 791, 802 (Alaska
2002) (affirming conclusion that companies were "mere instrumentalities" of
shareholders where there was evidence of five of the six factors).
89 Murat v. F/V Shelikof Strait , 793 P.2d 69, 76 (Alaska 1990) ("[T]he
primary consideration in determining whether to 'pierce the corporate veil' is whether
(continued...)
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The court's ruling authorized Little Squaw to seek judgment against Gold Dust's officers
and sole shareholders, Del and Gail Ackels.
But the superior court did not analyze the veil-piercing factors on the record
when it authorized Little Squaw to pierce the corporate veil. Nor did the superior court
explain its decision to pierce the corporate veil in its written findings and conclusions.
Because specific findings under the mere instrumentality test are needed to pierce the
corporate veil,90 we reverse the award of reclamation costs against Gail and remand for
specific findings.
N. Holding Gail Ackels Jointly Liable For The Attorney's Fees Award
Was Error.
Gold Dust also challenges the superior court's decision to hold Gail Ackels
jointly liable for the attorney's fees award in this case. It argues that Gail was not a party
to the lease nor a guarantor on the lease and that her role as a shareholder of Gold Dust
Mines does not justify holding her liable for the corporation's debts. Little Squaw
defends the superior court's attorney's fees award.
This question implicates the veil-piercing doctrine discussed in Part IV.M.
Because the superior court did not enter specific findings to justify its veil-piercing
decision and did not apportion liability among the defendants, we reverse the award
against Gail. We remand this issue for further consideration and entry of findings by the
superior court.
89 (...continued)
the corporate form has been abused by the person sought to be charged."); see also
L.D.G. , 211 P.3d at 1125 ("[T]he corporate veil may be pierced when a corporation is
nothing more than a 'mere instrument' of a shareholder.").
90 Murat , 793 P.2d at 76-77.
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O. The Superior Court Did Not Err In Awarding Enhanced Attorney's
Fees To Little Squaw.
Gold Dust challenges the superior court's decision to award enhanced
attorney's fees to Little Squaw. It denies that Del engaged in unreasonable or bad faith
conduct and argues that these aggravating factors do not justify the enhanced award in
this case. Little Squaw contends that the enhanced fee award was proper based on the
complexity of the case, length of the trial, and the "unreasonable claims and vexatious,
even bad faith, conduct by the Ackels[es]."
Alaska Civil Rule 82 authorizes the superior court to award attorney's fees
to the prevailing party in a civil case. The rule sets out a number of factors the court may
consider in fashioning a fee award.91 In this case, the superior court concluded that
because Little Squaw secured title to the disputed mining claims, it was the prevailing
party on the main issues in the litigation. The court awarded Little Squaw enhanced
attorney's fees in light of the complexity and length of the case, which was "made more
complex by delays in discovery" by Gold Dust and Del's inconsistent testimony on key
issues concerning the interpretation of the lease. According to the superior court,
91 These factors include: (A) the complexity of the litigation; (B) the length
of trial; (C) the reasonableness of the attorneys' hourly rates and the number of hours
expended; (D) the reasonableness of the number of attorneys used; (E) the attorneys'
efforts to minimize fees; (F) the reasonableness of the claims and defenses pursued by
each side; (G) vexatious or bad faith conduct; (H) the relationship between the amount
of work performed and the significance of the matters at stake; (I) the extent to which a
given fee award may be so onerous to the non-prevailing party that it would deter
similarly situated litigants from the voluntary use of the courts; (J) the extent to which
the fees incurred by the prevailing party suggest that they had been influenced by
considerations apart from the case at bar, such as a desire to discourage claims by others
against the prevailing party or its insurer; and (K) other equitable factors deemed
relevant. If the court varies an award, the court shall explain the reasons for the
variation. Alaska R. Civ. P. 82(b)(3).
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"[a]nother example of the unreasonableness of the claim, even bordering on bad faith, was
[Del's] argument that because the affidavit of annual work he had filed on [Little
Squaw]'s behalf was in fact defective, causing their claims to be void, that he was able
to re-file in his own name." The superior court concluded that Little Squaw "incurred
significantly higher attorney's fees than it should have if [the Ackelses] had pressed
legitimate claims, founded on actual facts, [rather] than pursuing litigation with shifting
facts and unreasonable arguments." The superior court's decision to award enhanced
attorney's fees on the basis of these findings was not manifestly unreasonable. We find
no error.
V. CONCLUSION
For the reasons described above, we AFFIRM the superior court's decision
to award Little Squaw title to the disputed mining claims and its resolution of the other
issues raised at trial. Because specific findings are needed to pierce the corporate veil, we
REVERSE the superior court's decisions to enter judgment and award attorney's fees
against Gail Ackels and REMAND for further proceedings consistent with this opinion.
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