Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_12-cv-00286/USCOURTS-azd-4_12-cv-00286-4/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1332 Diversity-Other Contract

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UNITED STATES DISTRICT COURT

DISTRICT OF ARIZONA

Cuprite Mine Partners, L.L.C., an Arizona

limited liability company,

Plaintiff,

v.

John H. Anderson, a married man acting in his

sole and separate capacity; et al., 

Defendants; ______________________________________

John H. Anderson, an individual,

Counter-plaintiff, Third-party

Plaintiff,

v.

Cuprite Mine Partners, L.L.C., an Arizona

limited liability company; Mark L. Anderson, an

individual; and George G. Anderson, an

individual,

Counter-defendant, Third-party

defendants. ______________________________________

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CIV 12-286 TUC DCB (LAB)

REPORT AND

RECOMMENDATION

 Pending before the court is a motion to dismiss filed by third-party defendants, Mark L.

Anderson and George G. Anderson, on January 28, 2013. (Doc. 103)

This action concerns sixteen patented lode mining claims located in the Copper Mountain

Mining District of Greenlee County, AZ. (Doc. 67, pp. 1-2) The plaintiff, Cuprite Mine

Partners (Cuprite), owns a 5/6 fractional interest in each of the sixteen mining claims. (Doc.

67, p. 2) The remaining 1/6 fractional interest is owned by one of the five individual

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defendants. (Doc. 67, pp. 2-3) Cuprite seeks to have the sixteen mining claims partitioned by

sale pursuant to A.R.S. §§ 12-1211 and 12-1218. (Doc. 14) Apparently, Cuprite would like to

sell the mining claims to the owners of the copper mine next door, but the defendants refuse to

agree. (Doc. 67, p. 3) 

In the pending motion to dismiss, third-party defendants, Mark Anderson and George

Anderson, move to dismiss the claim filed against them by the defendant/third-party plaintiff

John H. Anderson (JHA). (Doc. 103); (Doc. 96) 

The case has been referred to Magistrate Judge Bowman for report and recommendation

pursuant to the local Rules of Practice. LRCiv 72(a).

Background

This case has a rather complicated history. The 16 mining claims at issue were originally

owned by Guy Anderson. (Doc. 96, p. 2-3); (Doc. 67, p. 2) After he died, they passed to his

six children, who held the mining claims as co-tenants. Three of those children are the present

defendant/third-party plaintiff JHA and the third-party defendants, George G. Anderson and

Mark L. Anderson. (Doc. 67, p. 2) 

Recently, the owners of the copper mine next door expressed an interest in purchasing

the 16 mining claims. All of the co-tenants were in favor of a sale with the exception of JHA,

who believed the offered sale price was too low. Subsequently, the sale-favoring co-tenants

formed the Cuprite Mining Partners (Cuprite) for the purpose of seeking partition.

On April 17, 2012, Cuprite filed the instant action against sole defendant John H.

Anderson (JHA). At the time, he owned all 16 of the 1/6 interests that Cuprite did not control.

(Doc. 67, p. 2) Cuprite suggested in its original complaint that the court order partition in kind

because a contiguous portion of land could be carved out and given to JHA. (Doc. 1, pp. 3, 6)

Shortly afterwards, JHA distributed 12 of his 16 property interests among his four children.

(Doc. 67, pp. 2-3) Each child now has a 1/6 interest in three of the mining claims. Id.; (Doc.

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 The third-party complaint is captioned a “cross-complaint.” (Doc. 96) A crossclaim,

however, is directed against a coparty. Fed.R.Civ.P. 13(g). Cuprite is the opposing party, so

a claim directed against it by a defendant would be a counterclaim. Fed.R.Civ.P. 13(a). Mark

L. Anderson and George G. Anderson are not original parties, so a complaint directed against

them is a third-party complaint. Fed.R.Civ.P. 14.

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14-1) JHA retained his 1/6 interest in four of the mining claims. Id. Each set of three claims

(or four, in the case of JHA) is not contiguous. Id. 

Cuprite subsequently amended the complaint to include these four additional defendants.

(Doc. 14) In the amended complaint, Cuprite alleges that partition in kind is no longer feasible

and partition by sale is required. (Doc. 14, p. 5) 

The defendants filed motions to dismiss pursuant to Rule 12(b)(6) arguing joinder of all

defendants and mining claims in one action was improper. The court denied the defendants’

motions to dismiss on December 3, 2012. (Doc. 88)

Previously, Cuprite filed a motion for summary judgment arguing the mining claims as

a matter of law must be partitioned by sale rather than partitioned in kind. (Doc. 66) Cuprite’s

motion for summary judgment remains pending.

Shortly after the court denied the defendants’ motions to dismiss, the defendants filed

answers to the amended complaint. JHA also filed a counterclaim/third-party complaint1

against Cuprite, George G. Anderson (George), and Mark L. Anderson (Mark) for breach of

fiduciary duties. (Doc. 96) Originally, George and Mark each held a 1/6 interest in each of the

16 mining claims in common with JHA. They subsequently conveyed their interest to Cuprite

Mining Partners (Cuprite) before the present action was filed. 

On January 5, 2013, George and Mark filed the pending motion to dismiss the third-party

complaint. (Doc. 103) They argue the complaint fails to state a claim upon which relief may

be granted because the conduct ascribed to them by JHA does not breach any recognized legal

duty.

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Standard of Review

“A Rule 12(b)(6) motion tests the legal sufficiency of the claim.” Cook v. Brewer, 637

F.3d 1002, 1004 (9th Cir. 2011). The claim must allege a legally cognizable theory of relief and

include factual allegations sufficient to support that theory. Hinds Investments, L.P. v. Angioli,

654 F.3d 846, 850 (9th Cir. 2011).

To survive the motion to dismiss, “[f]actual allegations must be enough to raise a right

to relief above the speculative level . . . on the assumption that all the allegations in the

complaint are true even if doubtful in fact.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555,

127 S.Ct. 1955, 1965 (2007) (internal punctuation omitted). “[A] well-pleaded complaint may

proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that

a recovery is very remote and unlikely.” Id. at 556, 1965 (internal punctuation omitted). 

Discussion

Contrary to Rule 8(a)(2), the complaint is not a “short and plain statement of the claim

showing that the pleader is entitled to relief.” Instead, it is a long and involved narrative of

sales negotiations that took place before this action was filed between Mark and George and

representatives of the Freeport-McMoRan (Freeport) mine. (Doc. 96) The Freeport mine abuts

the 16 mining claims at issue here. Apparently, Mark and George were interested in selling the

claims to Freeport, but JHA believed the offering price was inadequate. Id. 

JHA believed the co-tenants had a duty to present a united front to Freeport because only

then would they be able to secure the best deal. Id. Instead, Mark and George reached a

separate tentative agreement with Freeport. Id. They planned to divide the claims into two

parts. Id. One part, “pushed off to one side,” would be reserved for JHA, and then the

remainder would be available to sell to Freeport. (Doc. 96, p. 10) (punctuation modified) The

original partition complaint in this action was presumably an attempt to achieve this division

in kind.

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JHA asserts that Mark and George’s course of conduct breached the fiduciary duty they

owed him as tenants in common. (Doc. 96, p. 12) As a result, his bargaining position has been

hopelessly compromised, and he has lost his share of the purchase price and royalties that

otherwise would have been agreed to.

In the pending motion, Mark and George argue that no fiduciary obligation exists

between tenants in common, or at least no obligation that they could have breached based on

the allegations in the third-party complaint. The court agrees.

In general, “[a] fiduciary relationship is a confidential relationship whose attributes

include great intimacy, disclosure of secrets, or intrusting of power.” Taeger v. Catholic Family

and Community Services, 196 Ariz. 285, 291, 995 P.2d 721, 727 (App. 1999) (punctuation

modified). “In a fiduciary relationship, the fiduciary holds superiority of position over the

beneficiary.” Id. Accordingly, the fiduciary has a duty to act with “utmost fairness and

honesty” in its dealings with that beneficiary. Taeger, 196 Ariz. at 293, 995 P.2d at 729. A

fiduciary relationship exists between a trustee and beneficiary, between a real estate broker and

client, and between an attorney and client. In re Naarden Trust, 195 Ariz. 526, 529, 990 P.2d

1085, 1088 (App. 1999) (trustee); Underdown v. Reche, 122 Ariz. 439, 441, 595 P.2d 671, 673

(App. 1979) (real estate broker); Matter of Piatt, 191 Ariz. 24, 26, 951 P.2d 889, 891 (1997)

(attorney).

The mere fact of co-tenancy does not, in and of itself, create a fiduciary relationship

between the co-tenants in all matters. Stoltz v. Maloney, 129 Ariz. 264, 267, 630 P.2d 560, 563

(App. 1981). A fiduciary relationship will be recognized, however, if warranted by particular

circumstances. Id. 

For example, a co-tenant in possession has a duty to operate the property in a manner that

does not impair the interests of all. In re Brumgard, 2007 WL 7532272, *5 (9th Cir. BAP 2007).

If the co-tenant is receiving all the profits and rents from the property, the co-tenant has a duty

to see that the taxes on the property are paid assuming the property generates sufficient revenue

to do so. Id. at *10. A co-tenant in possession may not, for example, allow the taxes to go

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unpaid and then purchase the common property for himself at a tax sale. Stoltz, 129 Ariz. at

267, 630 P.2d at 563. Presumably, this is because the absent co-tenants may reasonably rely

on the co-tenant in possession to keep the taxes paid or at least inform them if they are not. On

the other hand, if the taxes are assessed separately against each co-tenant, then a co-tenant may

purchase for himself the interest of a former co-tenant at a tax sale. Id. at 268, 564. The

defaulting co-tenant has no one but himself to blame for failing to pay his taxes.

In the third-party complaint, JHA claims George and Mark have a fiduciary duty to act

with utmost loyalty toward their co-tenants when they are conducting sales negotiations with

third parties. (Doc. 96) The co-tenants must, he reasons, act in concert in order to maximize

the benefit for all. Id. Failure to do so, he argues, is a violation of the fiduciary duty they owe

to each other. Id. JHA, however, has not directed the court to any case in which such a far

reaching fiduciary duty has been found to exist between co-tenants, and the court has found

none. 

The court concludes that the mere fact of co-tenancy is insufficient to support such a

duty. There is no inherent intimacy or superiority of position between co-tenants. Accordingly,

the ordinary rationale justifying the imposition of fiduciary duties is absent. Moreover, JHA’s

expansive view of a co-tenant’s fiduciary duties runs counter to the current state of case law.

 Under existing case law, a co-tenant is free sell his interest to a third-party. See Register

v. Coleman, 130 Ariz. 9, 12, 633 P.2d 418, 421 (1981). He may mortgage his interests “without

the consent or concurrence of his co-tenants.” Cooley v. Veling, 19 Ariz.App. 208, 209, 505

P.2d 1381, 1382 (1973). Likewise, a co-tenant may seek severance of the property if he

believes it would be in his best interests. Indeed, the partition statute explicitly allows for this.

A.R.S. § 12-1211. These rights run counter to the expansive fiduciary duty envisioned by JHA,

which would not permit a co-tenant to negotiate the sale of his individual property interest

without first considering the effect that sale would have on his co-tenants.

When negotiating with a prospective third-party purchaser, acting in concert might

indeed maximize the value for all co-tenants. There is, however, no fiduciary duty to do so.

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See, e.g., Ward v. Graydon, 264 P.3d 764, 767 (Utah App. 2011) (rejecting plaintiff’s argument

that “actions by a co-tenant that adversely affect the interests of the other co-tenants violate the

confidence and trust inherent in this community of interest, and may be a breach of a co-tenant’s

fiduciary duty.”).

Recommendation

 The Magistrate Judge recommends the District Court, after its independent review of the

record, enter an order GRANTING the motion to dismiss filed by third-party defendants, Mark

Anderson and George Anderson, on January 28, 2013. (Doc. 103) The third-party complaint

alleges breach of a fiduciary duty that Arizona law does not recognize. The third-party

complaint should be dismissed as it relates to third-party defendants, Mark Anderson and

George Anderson. (Doc. 96)

The third-party complaint also names the corporate plaintiff, Cuprite, as an additional

defendant. The complaint, however, does not make any allegations against Cuprite. See (Doc.

96); (Doc. 100, p. 4) Accordingly, the complaint also must be dismissed as it relates to Cuprite.

(Doc. 96)

Pursuant to 28 U.S.C. §636 (b), any party may serve and file written objections within

14 days of being served with a copy of this report and recommendation. If objections are not

timely filed, the party’s right to de novo review may be waived. See U. S. v. Reyna-Tapia, 328

F.3d 1114, 1121 (9th Cir. 2003) (en banc), cert. denied, 540 U.S. 900 (2003). Reply briefs in

support of objections are not permitted under the Local Rules.

DATED this 26th day of April, 2013.

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