CUPRITE MINE PARTNERS LLC, аn Arizona limited liability company v. John H. ANDERSON, a married man, acting in his sole and separate capacity; Todd Christian Anderson, a married man, acting in his sole and separate capacity; Margaret Jane Anderson Liljemquist, a married woman, acting in her sole and separate capacity; Peter Haakon Anderson, a single man; Stacey Elizabeth Anderson Ord, a married woman, acting in her sole and separate capacity
No. 13-16657
United States Court of Appeals, Ninth Circuit
Filed Dec. 31, 2015
Argued and Submitted Nov. 17, 2015.
809 F.3d 548
OPINION
M. SMITH, Circuit Judge:
This is an appeal of a diversity action to partition mining claims under Arizona law. We conclude that the district court properly applied Arizona‘s substantive law regarding partition and federal procedurаl standards for summary judgment, and we affirm.
FACTS AND PROCEDURAL BACKGROUND
Guy Anderson (Guy) owned sixteen mining claims in Arizona‘s Copper Mountain Mining District.1 Upon his death in 1975, he bequeathed them to his six children, with each child receiving an undivided one-sixth interest in each mining claim.
Five of Guy‘s children (or their successors in interest) wished to sell their interests in the mining claims to Freeport-McMoran Morenci Inc. (Freeport), the owner of an open-pit copper mine operating on adjacent property. Guy‘s remaining child, John H. Anderson (John), did not want to sell his interest in the mining claims. Those who wished to sell formed the Plaintiff entity Cuprite Mine Partners, LLC (Cuprite), which filed a partition action against John in the District of Arizona. In the original complaint, Cuprite prayed alternatively for partition in kind or partition by sale.
Gary Frank Urman (argued), John Carleton Lacy, DeConcini McDonald Yetwin & Lacy, P.C., Tucson, AZ, for Plaintiff-Appellee.
Todd C. Anderson (argued), Troy C. McMahan, John Anderson Law, San Clemente, CA, for Defendants-Appellants.
* The Honorable Brian M. Morris, District Judge for the U.S. District Court for the District of Montana, sitting by designation.
After John executed the quitclaim deeds, Cuprite filed an Amеnded Complaint to add John‘s children as additional defendants (collectively, the Defendants). Instead of requesting either partition in kind or partition by sale, the Amended Complaint requested only partition by sale. Cuprite alleged that because the quitclaim deeds diffused John‘s interest over multiple non-contiguous tracts of land, the property сould no longer be realistically partitioned in kind without depreciating its value, and that partition by sale would be more beneficial.
In response to the Amended Complaint, the Defendants filed a motion to dismiss, arguing that it was improper to join all of the Defendants in a single partition action. The district court denied the motion.
Cuprite moved fоr summary judgment, arguing that no material facts were in dispute, and that as a matter of law it was entitled to judgment ordering partition by sale. The district court granted summary judgment to Cuprite. The court appointed a commissioner to execute the sale of the property, and directed the commissioner to sell the property on terms “at least as favorable” as the terms outlined in an outstanding offer letter from Freeport. The commissioner was instructed not to sell the property for sixty days following the entry of the order, during which time any party could procure and present a better offer to purchase the property. The commissioner was ordered to proceеd with whatever offer he believed to be the most favorable after the sixty-day period had passed.
By the end of the sixty-day period, no one but Freeport had submitted an offer to purchase the property.2 On April 24, 2014, the district court approved the sale of the property to Freeport.
The Defendants timely appealed.
JURISDICTION AND STANDARD OF REVIEW
The district court had diversity jurisdiction in this casе pursuant to
DISCUSSION
On appeal, the Defendants assert that they were improperly joined into a single partition action. They also contend that the district court erred in applying Arizоna‘s partition statute by: (1) not following the procedures outlined in each and every provision of the partition statute, and instead proceeding immediately to partition by sale; (2) ordering sale to Freeport instead of sale at auction; and (3) ordering sale on summary judgment in-
I. Joinder of the Defendants
The district court did not abuse its discretion in allowing all of the Defendants to be joined in a single partition action. The district court concluded that because of the close proximity of the mining claims and the nature of strip mining, partitioning each claim individually could adversely affect the property rights of the adjacent claim holders. This suggests that joinder was mandatory under
II. Partition
The district court did not err when it granted summary judgment in favor of Cuprite and ordered partition by sale to Freeport.
As an initial matter, Cuprite has a legal right to partition under Arizona law. The Defendants suggest that instead of partition, Cuprite could have sold its fractional interest to Freeport, which as a cotenant could mine the lаnd and pay royalties to the Defendants. Even if this plan were feasible, Arizona‘s partition statute gives any owner or claimant of property held in cotenancy the right to compel partition without regard to the preferences of other owners or claimants.
The Defendants’ remaining contentions are that the district court erred by improperly applying the Arizona partition statute in ordering sale without following the procedures in each provision of the statute, in ordering sale to Freeport instead of a public auction, and in ordering a sale on summary judgment instead of after a trial. We address each contention in turn.
A. Partition by Sale
The district court properly concluded that partition by sale was more appropriate than partition in kind. The statute gives courts broad authority to order partition by sale when appropriate:
If on the trial of the action, it appears to the court that fair рartition of the property cannot be made without depreciating the value thereof, or that for any reason a sale is more beneficial to the parties or any of them, it shall in the first instance, enter a judgment directing that the real property be sold.
On the undisputed facts in the record, the district court properly wielded the power granted to it by
First, the nature of mining claims generally make them unsuitable for partition in kind. Manley v. Boone, 159 F. 633, 636 (9th Cir. 1908). The mining claims at issue apparently will need to be strip mined in order to obtain maximum value. The district court found that strip mining “takes two feet on the surface for each foot of ground mined underneath,” making “in-kind partition of one-sixth of each claim impossible.” Even if strip mining five-sixths of the area of each of the claims were technically possible, it would “seriously depreciate the value of the mining claims.”
Second, the “parties are so at odds with each other that in-kind partition would be impossible.” Partition by sale is appropriate where the parties are “unable to deal with each other in their best interests,” or where there is a “problem with access to a portion of the property.” Arnold v. Cesare, 137 Ariz. 48, 668 P.2d 891, 895-96 (App. 1983). Such is the case here; if the land were partitioned in kind, it is unlikely that the parties would be able to cooperate with one another to ensure that Cuprite (or its successor) could fully mine its property, and at the same time ensure that the Defendants could still access their small, scattered, and isolated tracts. Based on the undisputed facts before it, the district court properly applied
B. Sale to Freeport
The Defendants next assert that it was inappropriate to order sale to Freeport instead of individually auctioning off each claim to the highest bidder. They reason that each Defendant separately “would enjoy a tremendous strategic position,” and that each acre would sell for more money than if the entire parcel were sold at once. This is both speculative and irrelevant.
It is speculative because it is not at all clear that each Defendant would necessarily have made more money in individual auctions; they could have very well made less. Given the proximity of its mining operations, all of the parties concede that Freeport is the logical buyer of the claims. No firm buyer materialized during the sixty-day offer window set by the district court, so there is no reason to believe that one would have attended an auction for individual tracts within a similar time frame. If Freeport had been the only interested buyer at an auction, and the Defendants were required to accept the highest bid, Freeport could potentially have purchased the property for less than
Arguendo, even if the Defendants are correct, and at least some claims could have commanded a higher price at auction, the statute does not require the district court to order sale in a way that maximizes the proceeds tо particular individual owners. Instead, the statute only directs the court to “appoint a commissioner to make the sale ... and return the proceeds into court to be divided between the persons entitled thereto according to their respective interests.”
C. Summary Judgment
Finally, the Defendants contend that the summary judgment order should be re-versed because a trial is required in an Arizona partition action. We acknowledge that
But we need not (and do not) decide whether the statute requires Arizona state courts to conduct a trial in all partition by sale cases. Regardlеss of whether an Arizona state court would have been required to hold a trial, the district court correctly resolved the summary judgment motion according to the Federal Rules of Civil Procedure.
Under the Erie doctrine, federal courts sitting in diversity apply state substantive law and federal procedural rules. Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 427 (1996). The “procedural aspects of summary judgment” are governed by the Federal Rules of Civil Procedure, and “the law of the forum controls the substantive issues.” Caesar Elecs., Inc. v. Andrews, 905 F.2d 287, 290 n. 3 (9th Cir. 1990). We hold that even if Arizona state law prohibits summary judgment and instead requires a trial in a suit for partition by sale, such a requirement is procedural in nature and a federal court sitting in diversity is required to follow federal, not state, procеdural rules. See e.g. Maroules v. Jumbo, Inc., 452 F.3d 639, 645-46 (7th Cir. 2006) (“Federal courts may grant
In determining whether a state law is substantive or procedural, we ask whether the law is outcome determinative; in other words, whether it would “significantly affect the result of a litigation for a federal court to disregard a law of a State that would be controlling in an action upon the same claim by the same parties in a State court[].” Gasperini, 518 U.S. at 427 (quoting Guaranty Trust Co. v. York, 326 U.S. 99, 109 (1945)). We do not apply this test mechanically, but rather, guided by “the twin aims of the Erie rule: discouragement of forum-shopping and avoidance of inequitablе administration of the laws.” Id. at 428 (quoting Hanna v. Plumer, 380 U.S. 460, 468 (1965)).
Even if Arizona courts required trials in suits for partition by sale, that would not be outcome determinative here. According to the facts as presented on summary judgment, the outcome—partition by sale—would have been identical even if the district court had held a trial.5 There are no material disputed facts that would suggest that Cuprite is not entitled as a matter of law to partition by sale. Cuprite has an interest in the property and wishes to end its cotenancy with the Defendants. The Defendants speculated, without a genuine basis, that a more beneficial result could be achieved by not ordering parti-
tion, ordering partition in kind, or ordering sale by auction, but nothing in the record suggests that these issues needed to be elucidated in a trial for the district court to apply the appropriate legal standards. See supra Part II.A.
The district court properly applied all of the substantive provisions of Arizona‘s partition statutes that are relevant to this case, and properly applied
AFFIRMED.
MILAN D. SMITH, JR.
UNITED STATES CIRCUIT JUDGE