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Brimstone Natural Resources Co. v. Haight

United States District Court, D. Oregon, Medford Division

August 7, 2019

BRIMSTONE NATURAL RESOURCES CO., an Oregon corporation; JOHN WEST, an individual; ROBERT STUMBO, an individual Plaintiffs,
DAVID HAIGHT, an individual; STEPHEN WETMORE, individually and in his official capacity; DOUGLAS THACKERY, individually and in his official capacity; OREGON DEPARTMENT OF FORESTRY, a government agency; PETER DAUGHERTY, State Forester, Oregon Department of Forestry, in his official capacity; OREGON DEPARTMENT OF ENVIRONMENTAL QUALITY, a government agency; RICHARD WHITMAN, Director of the Oregon Department of Environmental Quality, in his official capacity; OREGON DEPARTMENT OF FISH AND WILDLIFE, a government agency; CURT MELCHER, Director of the Oregon Department of Fish and Wildlife, in his official capacity; DOES 1-10, individually and/or in their official capacities. Defendants.

          OPINION & ORDER


         Plaintiffs Brimstone Natural Resources Co., John West, and Robert Stumbo request declaratory relief for preemption, void for vagueness, contract rights, substantive and procedural due process, and equal protection issues. Second Am. Compl. ¶¶ 1-7 (#26). Additionally, Plaintiffs request monetary relief for alleged procedural due process and equal protection violations, each claim alleging one million dollars in damages. Id. ¶¶ VIII-DC Plaintiffs also allege an unconstitutional taking without just compensation and seek one million dollars in damages. Id. ¶¶ 6; VII. The Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331 because the asserted claims include a federal question arising under 42 U.S.C. § 1983.

         This matter comes before the Court on a Motion to Dismiss (#29) filed by Defendants David Haight, Stephen Wetmore, Douglas Thackery, Curt Melcher, Peter Daugherty, Richard Whitman, the Oregon Department of Forestry, the Oregon Department of Environmental Quality, and the Oregon Department of Fish and Wildlife ("Defendants"). For the reasons below, Defendants' motion is GRANTED. Defendants have also filed a Motion for Judicial Notice (#30). Plaintiffs do not contest the motion, and it is GRANTED. The parties have entered full consent to Magistrate Judge jurisdiction pursuant to 28 U.S.C. § 636(c)(1).


         Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, a motion to dismiss will be granted where the plaintiff fails to state a claim upon which relief may be granted. In order to state a claim for relief, a pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief" Fed.R.Civ.P. 8(a)(2). "A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted 'tests the legal sufficiency of a claim.'" Conservation Force v. Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011) (quoting Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001)).

         Dismissal under Rule 12(b)(6) is proper "if there is a 'lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.'" Id. (quoting Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988)). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). When evaluating a motion to dismiss, the court may first identify and strike allegations that are mere legal conclusions. Id. However, the court must accept allegations of fact as true and construe those allegations in the light most favorable to the non-moving party. Id. Odom v. Microsoft Corp., 486 F.3d 541, 545 (9th Cir. 2007) (internal citations omitted).

         In general, a court cannot consider any material outside the pleadings when ruling on a motion to dismiss unless the motion is treated as one for summary judgment and the parties are "given reasonable opportunity to present all materials made pertinent to such motion by Rule 56." Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) (quoting Fed. R Civ. P. 12(b)(6)). However, there are two exceptions to this rule. Id.

         First, a court is not required to convert a motion to dismiss into a motion for summary judgment if it is merely considering "material which is properly submitted as part of the complaint." Id. (internal citations omitted). Such materials may include documents specifically referred to and relied upon in the complaint, so long as the authenticity of the documents is uncontested. Id. Second, a court may take judicial notice of "matters of public record" under Federal Rule of Evidence 201. Id. at 689 (quoting Mack v. South Bay Beer Distrib., 798 F.3d 1279, 1282 (9th Cir. 1986)). Rule 201 enables the court to take judicial notice of facts that are "not subject to reasonable dispute" because they are (1) "generally known within the trial court's territorial jurisdiction," or (2) "can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Fed.R.Evid. 201(b). For instance, a court may take judicial notice of records and reports of administrative bodies. See Anderson v. Holder, 673 F.3d 1089 (9th Cir. 2012) (taking judicial notice of second appeal and merging it with earlier appeal).


         Plaintiffs John West and Robert Stumbo are fifty percent shareholders of Plaintiff Brimstone Natural Resources Co. ("BNR"), an Oregon corporation that owns property located along Dog Creek ("Dog Creek Property") and Brimstone Road ("Brimstone Property") in Josephine County, Oregon. Second Am. Compl. ¶¶ 13-15, 28-29 (#26). Only the Brimstone Property appears to be at issue in this case. As alleged, the Brimstone Property originates in a land patent issued in 1883 under the authority of the 1820 Land Act and supplemental legislation. Id. ¶ 33. Plaintiffs believe there is gold on the property and intend to conduct a mining operation to retrieve it. Id. ¶¶ 27, 38.

         In order to conduct their gold mining operation as they envisioned it, Plaintiffs harvested several trees in the riparian management area of the Brimstone Property during the summer of 2013. Ex. 101 at 7 (#30); see Second Am. Compl. ¶ 72 (#26). They sold this timber commercially in violation of the Oregon Forest Practices Act (OFPA). Ex. 101 at 7 (#30); OAR 629-600-0050. In response to public complaints about the timber harvest, the Oregon Department of Forestry (ODF) investigated the property in September 2013. Ex. 101 at 8 (#30). ODF Forester, Stephen Wetmore, found Plaintiffs had removed several trees in the riparian management zone of the property. Id. Defendant Wetmore issued citations (#13-SW022, #13-SW023, and #13-SW024; "2013 Repair Orders") requiring Plaintiffs to cease further harvesting operations and repair damage by replanting and maintaining new trees on the property. Ex. 101 at 9-10 (#30); Second Am. Compl. ¶ 69 (#26), Plaintiffs requested an administrative hearing to contest the citations. See Ex. 101 at 3 (#30).

         An administrative hearing was held on November 21, 2013. Ex. 101 at 3 (#30). The Administrative Law Judge ("ALJ") concluded that Plaintiffs had failed to retain trees in the riparian management zone in violation of the OFPA. Ex. 101 at 13 (#30). The ALJ also considered and ultimately rejected Plaintiffs' argument that the Mining Act of 1872 ("The Mining Act"), 30 U.S.C. §§ 22-54, and the federal mining patent for Brimstone Property preempted the OFPA, Ex. 101 at 17-20 (#30). The ALJ issued a Final Order affirming citations #13-SW023 and #13-SW024, which required Plaintiffs to cease further violation and repair damages on the land by replanting approximately 500 trees and maintaining them for four years. Ex. 101 at 11-12, 25 (#30) (#13-SW022 was not at issue in this hearing). According to the administrative record, Plaintiffs have not yet complied with the Repair Order, Ex. 103 at 2 (#30).

         During the November hearing, defendant Wetmore also indicated that Plaintiffs could avoid some of the 2013 Repair Order requirements if they submitted and gained approval for a Plan for Alternate Practice ("PFAP"). Second Am. Compl. ¶ 71 (#26); Ex. 102 at 11 (#30); OAR 629-605-0173. Although the OFPA's purpose is to preserve forestland properties such as the Brimstone Property, 44 ORS § 527, 630, the legislation allows for the possible conversion of forestland to other uses through the PFAP process, 44 ORS § 527.730; OAR 629-605-0173. PFAPs are commonly approved to convert forestland to agricultural uses; however, before this case, ODF staff had not encountered a PFAP application for converting forestland to mining purposes. Ex. 102 at 11 (#30).

         Plaintiffs allege that, in reliance on Mr. Wetmore's statements, they abandoned then-appeal of the 2013 Repair Orders and pursued a PFAP. Second Am. Compl. ¶ 71 (#26). Plaintiffs met with Mr. Wetmore in May 2014, at which time Mr. Wetmore encouraged them to show reasonable progress toward conversion of the property by submitting a written PFAP application. Id. ¶ 84; Ex. 102 at 11 (#30). Despite this meeting, Plaintiffs did not submit a written PFAP application until November 2014, more than twelve months after they learned of this option. Ex. 102 at 11 (#30). Plaintiffs have not yet been approved for a PFAP and allege they were informed the application had expired on March 6, 2015, Second Am. Compl. ¶ 95 (#26), and on December 31, 2015, /d¶ 91.

         At a subsequent hearing regarding all three citations, the ALJ issued a civil penalty of $4, 950 against Plaintiffs. Ex. 102 at 14 (#30). In January 2016, Defendant ODF issued an order prohibiting further commercial timber operations by Plaintiffs until the fines were paid and either reforestation occurred or a PFAP was approved ("Order to Prohibit"). Ex. 103 at 2 (#30). In response, Plaintiffs commenced this action, alleging that Defendants abused their authority in order to prevent Plaintiffs from acting on their plans to mine. Second Am. Compl. ¶¶ 100-104 (#26). Plaintiffs also allege that Defendants fabricated impossible and variable requirements to obtain approval for a PFAP and, in doing so, have limited the use of Plaintiffs' property to forestland. Id.


         Plaintiffs contend the following: (1) The OFPA, as applied in this case, is preempted by federal mining laws, Second Am. Compl. ¶ 118 (#26); (2) Defendants' actions have infringed upon a heretofore unrecognized "fundamental property right" of individuals "to use and develop their property as they choose" in violation of the 14th Amendment, Id. ¶¶ 123-26; (3) the OFPA, as applied in this case, is void for vagueness and thus unconstitutional, Id. ¶ 132; (4) Defendants' actions have infringed on Plaintiffs' right to freedom of contract in violation of Article I § 10 of the Constitution, Id. ¶ 137; (5) Defendants have violated Plaintiffs' 5th and 14th Amendment rights to due process rights by "depriving Plaintiffs of their constitutionally protected property rights and providing no reasonable notice or opportunity to be heard," Id. ¶¶ 143-43; (6) Defendants violated the Equal Protection Clause of the 14th Amendment by "singling Plaintiffs out for intentional and arbitrary discrimination, [sic] because of personal animus toward Plaintiffs," Id. ¶¶ 146-47; and (7) Defendants' actions constitute an "as applied" taking in violation of 42 USC § 1983, Id. ¶ 153. Furthermore, Plaintiffs allege that defendants Thackery, Haight, Wetmore, and Does 1-10 have, in their individual capacities, violated Plaintiffs' procedural due process and equal protection rights. Id. ¶¶ 156, 161.

         As a preliminary matter, Plaintiffs have not alleged that they have exhausted all administrative remedies. The doctrine of exhaustion of administrative remedies "provides 'that no one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted.'" McKart v. U.S., 395 U.S. 185, 193 (1969) (quoting Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 50-51 (1938)). "The basic purpose of the doctrine of exhaustion of administrative remedies is to allow an administrative agency to perform functions within its special competence to make a factual record, to apply its expertise and to correct its own errors so as to moot judicial controversies." Aleknagek Natives Ltd. v. Andrus, 648 F.2d 496, 499 (9th Cir. 1980). "If a statute does not provide for exhaustion of administrative remedies, a district court may require exhaustion in the exercise of its discretion." Porter v. Board of Trustees of Manhattan Beach Unified School Dist, 307 F.3d 1064, 1070 (9th Cir. 2002).

         Though exhaustion of administrative remedies is typically required as a condition of judicial review, courts have allowed exceptions when exhaustion does not serve the purposes of the doctrine or the particular administrative scheme involved. Andrus, 648 F.2d at 499. Thus, exhaustion is not required in the following circumstances: (1) if the prescribed administrative remedies are "inadequate or not efficacious," (2) if "pursuit of administrative remedies would be a futile gesture," (3) if "irreparable injury will occur" without immediate judicial review, or (4) if an administrative proceeding would be void. Id.

         It is not disputed in this case that Plaintiffs have failed to exhaust the available administrative remedies. First, as alleged in the complaint, Plaintiffs had the option to appeal the 2013 Repair Order, but they abandoned their appeal to pursue a PFAP. Second, according to the administrative record, Plaintiffs had the opportunity to request a hearing regarding the 2016 Order to Prohibit within 30 days of its issuance, Ex. 103 at 2 (#30), but Plaintiffs have not alleged that they did so. ...

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