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Leisnoi, Inc. v. Stratman (6/5/98), 960 P 2d 14

     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.


LEISNOI, INC., an Alaska      )
corporation,                  )    Supreme Court No. S-7339
               Appellant,     )
                              )    Superior Court No.
          v.                  )    3KO-93-356 CI
OMAR STRATMAN,                )    O P I N I O N
               Appellee.      )    [No. 4995 - June 5, 1998]

          Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Kodiak,
                    Brian C. Shortell, Judge.

          Appearances: Edgar Paul Boyko and John Richard
Fitzgerald, Edgar Paul Boyko & Associates, Anchorage, for
Appellant.  Jerald M. Reichlin, Law Offices of Jerald M. Reichlin,
Anchorage, for Appellee.

          Before:  Compton, Chief Justice, Rabinowitz,
Matthews, Eastaugh, and Fabe, Justices.

          COMPTON, Chief Justice.

          Omar Stratman holds a grazing lease on lands owned by
Leisnoi, Inc., a village corporation established under the Alaska
Native Claims Settlement Act (ANCSA), 43 U.S.C. sec. 1601 et seq.
(1971).  Leisnoi appeals the superior court's dismissal of its
request for a writ of forcible entry and detainer (FED) against
Stratman.  Leisnoi also appeals the superior court's award of
attorney's fees to Stratman.  We reverse in part, vacate in part,
and remand.
          Omar Stratman is the holder of a grazing lease that
allows him to graze cattle on 15,870 acres on Kodiak Island.  This
land is owned by Leisnoi.  Stratman originally leased this land and
an additional 4,530 acres, when they were owned by the federal
government and managed by the Bureau of Land Management (BLM).  He
held a federal grazing lease, #A-059264, issued under the Alaska
Livestock Grazing Act, 43 U.S.C. sec. 316 et seq. (1994).
          In December 1966 the State selected the 20,400 acres
leased by Stratman, pursuant to the Alaska Statehood Act.  The
State received tentative approval from the federal government for
its selections, and Stratman's federal lease was canceled by the
BLM with the understanding that the State would issue its own
grazing lease for the lands.  The State decided not to issue a new
lease document, however.  Instead, it wrote Stratman that "[t]he
State will not issue a new lease but will administer the lease
under the terms and conditions of the former lease and in a manner
that will not deprive you of any rights or benefits which you held
under the Federal lease."  The lease was renumbered ADL 36306.  In
December 1980 the State renewed ADL 36306 through the year 2001. 
          The 15,870 acres at issue were never conveyed to the
State, however, because of the passage of ANCSA.  As the ANCSA
corporation for the Native Village of Woody Island, Leisnoi was
allowed in January 1976 to select this land.  Because the lands
selected by Leisnoi were lands previously "selected by, or
tentatively approved to, but not yet patented to, the State under
the Alaska Statehood Act,"they had to be withdrawn from selection
by the State, pursuant to subsection 11(a)(2) of ANCSA, 43 U.S.C.
sec. 1610(a)(2). [Fn. 1]  The BLM rescinded its tentative approval
voided State selection of these lands in August 1985. 
          In November 1985 the lands were interim conveyed to
Leisnoi.  The interim conveyance document provided that the
conveyance was "subject to"Stratman's pre-existing grazing lease,
as required by subsection 14(g) of ANCSA.  The State and the
federal government both waived lease administration of these lands
in favor of Leisnoi.  The State instructed Stratman to make pro 
rata rental payments to Leisnoi "for [the 15,870 acres] transferred
to them."
          Leisnoi alleged that Stratman committed various breaches
of the lease; it sought an order evicting Stratman from, and
entitling Leisnoi to possession of, the leased lands it owns. 
Leisnoi filed a combined FED and declaratory judgment action
against Stratman in the superior court.  The superior court denied
Leisnoi's FED request, basing its denial on two separate grounds. 
First, the court found that Stratman's lease "cannot be terminated
without providing Mr. Stratman with the due process guaranteed by
Article I, section 7 of the Alaska Constitution,[ [Fn. 2]] under
McCarrey v. Commissioner, 526 P.2d 1353 (Alaska 1974),"and that
"[w]ithout a termination of the lease Leisnoi does not enjoy a
right of possession and so the FED request must be denied." 
Second, the court found that "[t]he land description in Leisnoi's
complaint is insufficient to form the basis of a judgment or
order,"as it did not meet the requirements of Alaska Civil Rule
85. [Fn. 3]  Leisnoi appeals.
     A.   Standard of Review

          This appeal presents questions of law requiring the
interpretation of the due process clause of the Alaska
Constitution, subsection 14(g) of ANCSA, and Alaska Civil Rule
85(a)(1).  On questions of law, we do not defer to the lower
court's decision, but will adopt the rule of law that is most
persuasive in light of precedent, reason, and policy.  See Guin v.
Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979).
     B.   The Superior Court Should Have Provided the Hearing
Procedures and Due Process Required under the Lease.

          ADL 36306 was the State grazing lease held by Stratman. 
Stratman's original lease, federal grazing lease #A-059264, was
canceled in 1967, and ADL 36306 was created with the State as
lessor and Stratman as lessee.  ADL 36306 incorporated by reference
the terms of the federal grazing lease.  However, when the State
waived administration of the lease as to the 15,870 acres at issue,
ADL 36306 was effectively severed into two distinct leases.  One,
for 4,530 acres, continues to be administered by the State and is
not at issue in this case.  The other, for 15,870 acres, is now
administered by Leisnoi.
          ANCSA subsection 14(g) guarantees Stratman's rights under
the pre-existing federal grazing lease, as follows:
          All conveyances made pursuant to this Act
shall be subject to valid existing rights.  Where, prior to patent
of any land or minerals under this Act, a lease . . . has been
issued for the surface or minerals covered under such patent, the
patent shall contain provisions making it subject to the lease . .
. and the right of the lessee . . . to the complete enjoyment of
all rights, privileges, and benefits thereby granted to him.

          Such rights necessarily include not only those contained
in the lease itself, but also the right to due process and to the
various statutory protections and guarantees that are incidental to
the possession of a grazing lease under the Alaska Livestock
Grazing Act (43 U.S.C. sec. 316 et seq.).  Of particular importance
the instant case are Grazing Act sections 316g and 316m. 
Section 316g provides:
          Grazing fees

               (a)  The Secretary shall determine for
each lease the grazing fee to be paid.  Such fee shall 

               (1)  Be fixed on the basis of the area
leased or on the basis of the number and kind of stock permitted to
be grazed;

               (2)  Be fixed, for the period of the
lease, as a seasonal or annual fee, payable annually or
semiannually on the date specified in the lease;

               (3)  Be fixed with due regard to the
general economic value of the grazing privileges, and in no case
shall exceed such value; and

               (4)  Be moderate.

(Emphasis added.)  Section 316m provides:
          Hearing and appeals

               (a)  Any lessee of . . . grazing
privileges . . . may procure a review of any action or decision of
any officer or employee of the Interior Department in respect of
such privileges, by filing with such officer as the Secretary of
the Interior may designate of the local land office an application
for a hearing, stating the nature of the action or decision
complained of and the grounds of complaint.  Upon the filing of any
such application such officer of such land office shall proceed to
review such action or decision as nearly as may be in accordance
with the rules of practice then applicable to applications to
contest entries under the public land law.  Subject to such rules
of practice, appeals may be taken by any party in interest from the
decision of such officer to the Secretary.

               (b)  The Secretary shall take no action
which will adversely affect rights under any lease pursuant to this
subchapter until notifying the holder of such lease that such
action is proposed and giving such holder an opportunity for a
          Though Stratman is entitled to all of the "rights,
privileges, and benefits . . . granted to him"under the lease,
this does not mean that he is entitled to have the administration
of his lease overseen by the State or federal government,
notwithstanding the language in 43 U.S.C. sec. 316 referring to the
Secretary of the Interior.  The governments of both the State of
Alaska and the United States have explicitly waived administration
of the lease now owned by Leisnoi.  Rather, Leisnoi is required, in
administering the lease, to set fees, provide notice, and take all
other actions in a manner consistent with the rights accorded
Stratman under the lease and under the Alaska Livestock Grazing
Act. [Fn. 4]  
          We will not require Leisnoi to proceed before a State or
federal agency -- these want no part of the administration of this
lease.  Yet due process requires that Stratman receive "notice
[and] opportunity to be heard in some meaningful way and to present
mitigating circumstances prior to the termination of the lease." 
McCarrey v. Commissioner, 526 P.2d 1353 (Alaska 1974).  And, as
previously noted, lease fees are determined by statutory criteria
and the lessee has a right to a hearing concerning their validity
before they may be imposed.  See supra, p. 6.  We conclude that
Stratman's due process right under Alaska's constitution, to be
heard on the issue whether Leisnoi may appropriately terminate his
lease, may be satisfied by the superior court before which the
present action was brought. [Fn. 5]  We therefore reverse the
superior court's dismissal of Leisnoi's FED action insofar as it
was based on Leisnoi's inability to terminate the lease without
first providing Stratman due process.  On remand, the superior
court should make specific findings as to whether Stratman breached
the lease, whether Leisnoi validly increased the lease rental, and
whether any arrearages are owed by Stratman to Leisnoi.  In making
these findings the superior court should apply the standards from
the Alaska Livestock Grazing Act. [Fn. 6]  With respect to
Leisnoi's efforts to raise the lease fee, the superior court should
provide the review that would have been provided administratively
by the Interior Department and the Secretary of the Interior.  The
court then should determine, in light of its findings and review,
whether and under what circumstances Leisnoi was or will be
entitled to terminate Stratman's lease.  Once these determinations
are made, the court may proceed to determine whether the elements
of an FED action or an ejectment action have been satisfied. [Fn.
     C.   The Property Description Was Adequate under Alaska Civil 
          Rule 85(a)(1).
          The superior court concluded that the land description
contained in Leisnoi's complaint failed to meet the requirements of
Alaska Civil Rule 85(a)(1) and was therefore "insufficient to form
the basis of a judgment or order."  Rule 85(a)(1) requires, in FED
actions, that
          [t]he premises claimed shall be described in
the complaint with such certainty that the defendant will be
distinctly advised of their location so that possession thereof may
be delivered according to that description.

Alaska R. Civ. P. 85(a)(1).  Leisnoi concedes that the property
description contained in its complaint "was simply that of the
grazing lease."  It contends, however, that this description is
"specific and sufficient."         
          The grazing lease encompasses at least two parcels of
land that are not subject to Leisnoi's FED claim: the 4,530 acres
of the leasehold that remained in State ownership, and Stratman's
homestead, to which Leisnoi withdrew all claims on the morning of
trial.  However, it is abundantly clear that Stratman, the
"defendant"as contemplated in Rule 85(a)(1), knows what lands are
at issue in this action.  They are those 15,870 acres patented to
Leisnoi, not including either Stratman's homestead or the 4,530
acres remaining in State ownership.  This litigation has gone on,
in one form or another, for over twenty years; there is no room for
Stratman to claim that he is unaware of what is at stake.  We
therefore reverse the superior court's determination that this FED
action must be dismissed due to a defective description.  On
remand, the superior court should allow Leisnoi to amend its FED
complaint to accurately describe the 15,870 acres now in question
in this action.
     D.   The Superior Court's Award of Attorney's Fees Is Vacated.
          Leisnoi argues that the superior court should have
awarded attorney's fees to Leisnoi, instead of Stratman, because,
on the morning of trial, Stratman stipulated to the dismissal with
prejudice of an adverse possession counterclaim against Leisnoi. 
Leisnoi argues that the value of the lands that had their title
called into question by this counterclaim far exceeds the value of
the lease to graze those lands, and that Leisnoi therefore
"prevailed on the main issue in the litigation, which was the claim
that had the highest monetary value at stake." 
          This court will not disturb a Civil Rule 82 fee award
unless there has been a clear abuse of discretion, which is
"established only where it appears that the court's determination
is manifestly unreasonable."  Adoption of V.M.C., 528 P.2d 788, 795
(Alaska 1974).  "Like the award itself, the actual determination of
who the 'prevailing' party is is also within [the broad]
discretion"of the trial court.  Id.  
          Prior to this court's reversal, the superior court's
determination of prevailing party status was not a clear abuse of
discretion.  Both Leisnoi and Stratman raised what appear to have
been overly ambitious claims against each other, only to withdraw
these claims on the morning of trial.  Leisnoi abandoned its claim
to Stratman's homestead, and Stratman agreed to the dismissal of
his adverse possession counterclaim with prejudice.  Having
eliminated these less tenable claims, the parties were able to
concentrate on the FED claim, the principal issue before the court. 
Because we have remanded this issue to the superior court, the
award of attorney's fees may or may not ultimately be appropriate. 
We therefore vacate the superior court's award of attorney's fees. 
The award of attorney's fees will ultimately depend upon which
party prevails on remand on the right-to-possession issue.   
          The superior court judgment is REVERSED in part, VACATED
in part, and the case is REMANDED for further proceedings
consistent with this opinion.  


Footnote 1:

     ANCSA sections correspond to the sections set out in 43 U.S.C.
sec. 1601 et seq., but the numbering system is not the same as that
the U.S.C.  This opinion refers to the ANCSA sections.  For a
cross-reference of ANCSA numbering and the U.S.C. sections, see
table at p. 1 of ANCSA.

Footnote 2:

               Article I, section 7 of the Alaska Constitution
provides, in part, that "[n]o person shall be deprived of life,
liberty, or property without due process of law."  

Footnote 3:

               Rule 85.  Forcible Entry and Detainer.

          (a) . . .
               (1)  Description of Premises.  The
premises claimed shall be described in the complaint with such
certainty that the defendant will be distinctly advised of their
location so that possession thereof may be delivered according to
that description. 

Footnote 4:

     Subsection 14(g) of ANCSA qualifies the interests to which
Leisnoi succeeded upon issuance of the patent.  Leisnoi did not
succeed to all of the interests a private lessor conceivably might
have had in a similar lease, but, at most, "to any and all
interests of the State . . . as lessor[.]"  The State's interests
as lessor were limited and defined by the statutory and
constitutional due process protections described above. 

Footnote 5:

     In view of the unique circumstances of this case, in which the
court must provide hearings and other due process protections that
would have been afforded by the Department of the Interior under
the lease, the summary provisions of the FED statute are
inapplicable.  See Thrift Shop, Inc. v. Alaska Mut. Sav. Bank, 398
P.2d 657 (Alaska 1965) (stating that FED action may be expanded if
parties are on notice and not prejudiced).  

Footnote 6:

     The Alaska Livestock Grazing Act should not be applied in such
a way as to require the involvement of the federal government or
any State agency.  Leisnoi administers this lease.

Footnote 7:

     We recognize that the adjudication that we contemplate may
take place in two or more stages.