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Stratman v. Leisnoi, Inc. (12/18/98), 969 P 2d 1139
<![CDATA[
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.
THE SUPREME COURT OF THE STATE OF ALASKA
OMAR STRATMAN, )
) Supreme Court No. S-8103
Appellant, )
) Superior Court No.
v. ) 3AN-96-00502 CI
)
LEISNOI, INC., ) O P I N I O N
)
Appellee. ) [No. 5054 - December 18, 1998]
)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Stephanie E. Joannides, Judge, pro tem.
Appearances: Michael J. Schneider and Eric R.
Cossman, Law Offices of Michael J. Schneider, P.C., Anchorage, for
Appellant. Edgar Paul Boyko and Robert L. Breckberg, Edgar Paul
Boyko and Associates, Anchorage, for Appellee.
Before: Matthews, Chief Justice, Compton,
Fabe, and Bryner, Justices. [Eastaugh, Justice, not participating.]
COMPTON, Justice.
I. INTRODUCTION
Leisnoi, Inc. sued Omar Stratman to quiet title to a
parcel of property referred to hereafter as "Termination Point."
The superior court granted summary judgment and awarded attorney's
fees to Leisnoi. We vacate those decisions and remand with an
order to enter a stay, as explained below.
II. FACTS AND PROCEEDINGS
In 1974 the Secretary of the Interior certified Leisnoi,
under the Alaska Native Claims Settlement Act (ANCSA), as the
village corporation for Woody Island. This certification entitled
Leisnoi to select lands to be patented to it by the United States.
The lands Leisnoi selected included parcels on which Stratman held
federal or state grazing leases and parcels that Stratman allegedly
used for recreational purposes. In 1976 Stratman, and others,
commenced an action in federal district court against the Secretary
of the Interior seeking to decertify Leisnoi, to enjoin the United
States from patenting to Leisnoi any of the lands that Leisnoi had
selected, and to void any conveyances already made to Leisnoi. The
district court dismissed the case as to most plaintiffs for failure
to exhaust administrative remedies, but permitted Stratman and one
other plaintiff to amend their complaint. The court determined
that they were entitled to actual (as opposed to merely
constructive) notice of Leisnoi's pending certification due to
their record interests in grazing leases. They had not received
such notice. Leisnoi then quitclaimed any interest in lands
subject to the abovementioned leaseholds. The district court then
dismissed Stratman's action, finding that there was no longer any
"case or controversy." Stratman appealed, arguing that, as a
recreational user of the land in question, he had an interest
sufficient to entitle him to pursue the decertification action
against the Secretary of the Interior.
On appeal, the United States Court of Appeals for the
Ninth Circuit determined that Stratman's previous use of the land
for "hunting, camping, picnicking, and photography"was sufficient
to show an injury particular to Stratman resulting from Leisnoi's
removal of this land from the public domain. The court determined
that this injury would be redressable "by enjoining the defendant's
removal of the land from the public domain." The court further
concluded that, even though it was only Stratman's record interest
that had entitled him to actual notice (and thus excused him from
exhausting his administrative remedies) in the first place,
Leisnoi's quitclaim could not retroactively extinguish his right to
that notice. The court remanded Stratman's case to the district
court for further proceedings. The year was 1981.
In 1980 Leisnoi had merged with Koniag, Inc., the
regional corporation for the area. In 1981 a Leisnoi shareholder
filed a derivative action seeking to undo the merger (hereinafter
the "demerger litigation"). In 1982 Stratman and the merged
Leisnoi/Koniag entered into a settlement agreement whereby Stratman
agreed to dismiss his decertification suit and Leisnoi/Koniag
agreed to sell certain lands to Stratman, to be conveyed by
quitclaim deed. After the execution of the settlement agreement in
March 1982, Stratman dismissed the decertification litigation. In
1983 Leisnoi and Koniag settled the demerger litigation, with court
approval, by rendering the merger void ab initio.
In 1985 Leisnoi received a patent to the surface rights
of the land at issue in the decertification-litigation settlement
agreement. Stratman sought to enforce the settlement agreement,
but Leisnoi refused to honor it. In 1988 Stratman successfully
pursued an action in superior court to enforce the settlement
agreement, and Leisnoi appealed. In 1992 this court ruled that
Leisnoi was not bound by the decertification-litigation settlement
agreement -- no enforceable contract existed between Stratman and
Leisnoi.
Stratman recorded a lis pendens against the lands that
had been patented to Leisnoi in 1985 and moved the federal district
court to reopen his decertification suit. The court denied this
motion and Stratman appealed. During the pendency of this appeal,
Leisnoi moved the court to expunge the lis pendens. The court
denied this motion without prejudice. On appeal, the United States
Court of Appeals for the Ninth Circuit concluded that the district
court had abused its discretion in denying the decertification
motion, and reversed. In 1995 the federal district court entered
the order reopening Stratman's decertification suit. Leisnoi again
moved to expunge the lis pendens. The court denied this motion.
Soon thereafter, it entered an order "remanding"the case to the
Interior Board of Land Appeals (IBLA) for it to determine in the
first instance whether Leisnoi had been properly certified. IBLA
has yet to make this determination.
In 1996 Leisnoi filed this action in superior court to
quiet title to a parcel of land known as Termination Point, which
is part of the land patented to Leisnoi in 1985. Stratman removed
this action to federal district court. Stratman also filed a
partial release of his lis pendens, which would permit Leisnoi to
convey Termination Point to the Exxon Valdez Oil Spill Trustees
(EVOS). Such a conveyance was Leisnoi's asserted reason for
bringing the quiet-title action. The federal district court
remanded the action back to the state court, explaining that this
was "an action to quiet title under state law which does not
present a federal question. Whether the state court has
jurisdiction is a matter to be decided in that court." Following
this remand, Leisnoi moved for summary judgment, arguing that, even
if Stratman's decertification action succeeded, it could not affect
Leisnoi's title to Termination Point. Stratman filed a cross-
motion to dismiss, or to stay pending determination of the federal
action. The superior court found that Stratman has no interest in
title to Termination Point and that he lacks standing to sue to
challenge the patent from the United States. The final judgment
quieted title to Termination Point in Leisnoi and barred Stratman
"from asserting, individually or on behalf of others, any claim in
Termination Point adverse to Leisnoi, Inc." The superior court
also awarded attorney's fees to Leisnoi, finding that Stratman is
not a public-interest litigant.
Stratman appeals.
III. STANDARD OF REVIEW
We review a grant of summary judgment de novo. We will
affirm when the record presents no genuine issues of material fact
and one party is entitled to judgment as a matter of law. We draw
all reasonable inferences in favor of the non-moving party. SeeArctic Tug & Barge v. Raleigh, Schwarz & Powell, 956 P.2d 1199,
1200 (Alaska 1998).
IV. DISCUSSION
Can the Superior Court Resolve the Quiet-Title Action at
this Time?
Stratman's principal argument is essentially that a state
court has no jurisdiction to adjudicate the merits of his
decertification action. He maintains that, in order to quiet title
to Termination Point, it is necessary to adjudicate the merits of
the decertification action. [Fn. 1] As explained above, Leisnoi
does not directly contest this point. Rather, Leisnoi argues that
the state court has jurisdiction to quiet title to the lands in
question, and that there is nothing Stratman can do to affect
Leisnoi's title.
They are both correct, to a degree. Stratman makes no
credible argument that the state does not have jurisdiction to
quiet title to the land, standing alone. Leisnoi makes no argument
that the state does have jurisdiction to determine the merits of
Stratman's decertification action. The superior court did not see
itself as determining the merits of the decertification action.
The question it purportedly resolved was whether the
decertification suit, even if successful, could cast a cloud over
Leisnoi's title to Termination Point.
The essential question on appeal is whether the superior
court must, in fact, determine the merits of the decertification
action in order to quiet title to Termination Point. If it would
have to do so, then, although the state court will, at some point,
be able to quiet title to the lands in question, it must wait until
the necessary issue has been finally resolved, either by settlement
or in federal court -- the only court with jurisdiction to finally
determine the merits of the decertification action.
A. If Stratman Succeeds in His Decertification Action, Would
the Federal District Court Have the Power To Grant a Remedy
Affecting Leisnoi's Title to Termination Point?
Leisnoi contends that Stratman's decertification action
cannot affect Leisnoi's title to Termination Point. Stratman does
not contest the superior court's determination that he cannot
directly challenge the patent conveying Termination Point to
Leisnoi. He argues, instead, that the federal district court may,
as a remedy in his decertification action, equitably undo the
transaction whereby Leisnoi received that patent.
The superior court concluded that the federal district
court would not be able to equitably "undo"that transaction. It
observed that, in Lee v. United States, 629 F. Supp. 721, 729
(D. Alaska 1985), the court addressed the question of equitable
remedies within the framework of ANCSA. In Lee, the court held
that ANCSA preempted common-law remedies:
Congress intended ANCSA to "occupy the field"
in this area and to preempt any common-law theories or other
statutory claims that individuals might assert. Given the
extensive set of provisions in ANCSA delineating the rights of
individual claimants to ANCSA-conveyance lands, any attempt to
supplement these provisions with common-law remedies, such as the
constructive-trust theory advanced by plaintiffs, would represent
an attempt to alter the comprehensive legislative scheme adopted by
Congress in ANCSA, rather than to "fill a gap"that Congress has
not occupied, and would therefore be an impermissible application
of federal common law.
Id. (citing City of Milwaukee v. Illinois, 451 U.S. 304, 314, 319,
324 & n.8 (1981)). The Ninth Circuit adopted that reasoning in
Donnelly v. United States, 850 F.2d 1313, 1321 (9th Cir. 1988).
There is a critical difference, however, between
Lee/Donnelly and the instant case. Lee and Donnelly involved
claims that land had been improperly conveyed to certain native
villages. See Lee, 629 F. Supp. at 728; Donnelly, 850 F.2d at
1321. Neither case involved a claim that the native village to
which the land had been conveyed had been improperly certified. It
is axiomatic that, if it is determined that Leisnoi was not
properly certified under ANCSA, then the provisions of ANCSA no
longer apply, and never should have applied, to transactions
involving Leisnoi. Put simply -- if Leisnoi is decertified, it can
no longer argue that ANCSA preempts all common-law remedies that
could be imposed, because ANCSA would no longer apply at all. It
would be ironic if Leisnoi (assuming that Stratman is ultimately
victorious in the decertification action) could perpetrate a fraud
on the public, obtaining title to land under the guise of a
legitimate ANCSA corporation, and then avoid making restitution on
the grounds that ANCSA provides no explicit remedy for such an
occurrence.
We conclude that if Stratman is successful in his
decertification litigation, the federal district court would have
the power to grant a remedy affecting Leisnoi's title to
Termination Point.
B. Is Stratman's Decertification Action Still "Pending"for
Purposes of the Lis Pendens Recorded against Termination Point?
The superior court found that Stratman's decertification
case had been remanded to IBLA and that IBLA lacks jurisdiction
over the patented lands:
Although the IBLA has the authority to
hear Stratman's decertification action, it has no authority to
impose a constructive trust on the lands patented regardless of the
outcome. . . . Were Stratman successful in decertifying Leisnoi, he
would still be required to bring an action in federal court to
impose the remedy of a constructive trust.
Leisnoi further explains that "[t]he Ninth Circuit has
already rejected Stratman's argument that the final judgment did
not send the case in its entirety to the IBLA,"and notes that
"this court has ruled that 'when no appeal is taken a dismissal
terminates the operation of a lis pendens with respect to that
action.'" In fact, the quote is "Generally, when no appeal is
taken . . . ." Blake v. Gilbert, 702 P.2d 631, 642 (Alaska 1985)
(emphasis added) (overruled on other grounds by Bibo v. Jeffrey's
Restaurant, 770 P.2d 290, 296 n.9 (Alaska 1989)).
We have held that AS 09.45.940, the lis pendens statute,
simply provides "a convenient method for giving constructive notice
to subsequent purchasers and encumbrancers that their interests may
be affected by a pending action." Leisnoi v. Stratman, 835 P.2d
1202, 1210 n.17 (Alaska 1992) (referring to statute's former
numbering, AS 09.45.790). Because Stratman currently pursues a
course (albeit currently before an administrative body) that may
affect the interests of "subsequent purchasers and encumbrancers,"
it would best serve the purpose of the lis pendens statute to
determine that Stratman's action is still "pending"for purposes of
the lis pendens.
From a technical standpoint, argues Leisnoi, the federal
district court dismissed, in a final judgment, Stratman's
decertification claim, albeit without prejudice to his filing
another action after IBLA renders its decision. Leisnoi suggests
that, because Stratman has no case currently pending in federal
court that could affect Leisnoi's title to Termination Point, title
should be quieted in Leisnoi. [Fn. 2]
We conclude that this attempt to elevate form over
substance has no merit. Even assuming, as Leisnoi does, that the
federal district court did not retain jurisdiction over the case
when it remanded the case to IBLA, the court's comments make
absolutely clear that it viewed the remand to IBLA as but another
step in the ongoing overall action, and not as a final resolution.
The court simply wished to have the agency use its expertise to
determine, in the first instance, whether Leisnoi had been properly
certified. [Fn. 3] We conclude that Stratman's decertification
action is still pending for purposes of the lis pendens filed
against Termination Point. Stratman should, at the earliest
opportunity, reform the lis pendens to reflect the current state of
the ongoing litigation.
C. Resolution
Because the superior court has jurisdiction over the
quiet-title action, but may not determine the merits of Stratman's
decertification action, and because Stratman's decertification
action may yet affect Leisnoi's title to Termination Point, the
appropriate resolution would have been to stay the quiet-title
action pending the final resolution of Stratman's decertification
action. We conclude that the superior court abused its discretion
in failing to issue such a stay.
D. Attorney's Fees
Because there is, at this time, no prevailing party, we
vacate the award of attorney's fees. The superior court may award
attorney's fees after the decertification litigation is finally
resolved, and it then resolves this quiet-title action.
V. CONCLUSION
We VACATE the decisions quieting title to Termination
Point in favor of Leisnoi and awarding attorney's fees to Leisnoi.
We REMAND the case with instructions to enter a stay pending the
final resolution of the decertification litigation.
FOOTNOTES
Footnote 1:
Leisnoi mischaracterizes Stratman's principal argument when it
suggests that "Stratman argues that there is federal rather than
state jurisdiction over this quiet title suit. . . . Stratman now
asks that this Court find that the [federal courts] were wrong; he
argues that the federal district court [did, in fact, have]
jurisdiction." Stratman's principal argument is not that the state
court has no jurisdiction over the quiet-title action, but that the
state court has no jurisdiction to adjudicate an issue essential to
the resolution of that action -- i.e. whether Leisnoi was properly
certified under ANCSA.
Footnote 2:
Leisnoi's argument that Stratman cannot sue to annul the
patent is irrelevant. Nothing appears to bar Stratman from filing
an action in federal court, if and after he succeeds before IBLA,
to impose a constructive trust on the lands patented to Leisnoi.
For the same reason, Leisnoi's argument that the statute of
limitations has elapsed on any suit that the United States might
bring is equally irrelevant. Stratman's original case was filed
well before the six-year limitations period expired. It was, in
fact, filed prior to the issuance of the patent and sought
prospective injunctive relief.
Footnote 3:
The court noted that "[t]hat course [remanding to IBLA] will
permit exhaustion of administrative remedies, albeit belated, and
give the Court the benefit of the agency's expertise"and that
"[i]t was never my expectation that this case would finally be
resolved at the administrative level. Once an agency decision was
reached, I assumed that the parties would file a new action and
return to federal court. . . . Whether the Agency erred or not is
an issue I prefer to decide at a later time after I have the
benefit of the Agency's decision."
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