No. 90-167 IN THE SUPREME COURT OF THE STATE OF MONTANA 1991

JACK M. AND CAROLYN M. SCANLON, GARY L. AND BEVERLY J. BECK, WILLIAM INKRET,JR., M.D., P.C., PROFIT SHARING TRUST, RICHARD AND MARY GRANBERG AND RICHARD AND ROBERTA URWILLER, Plaintiffs and Appellants,-vsCABLE MOUNTAIN MINE, INC., a ~evada Gorp-t and MAGELLAN RESOURCES COW.

## , a Montana corps Defendants and Respondents.

APPEAL FROM: District Court of the Third Judicial District, In and for the County of Deer Lodge, The Honorable Ted L. ~izner, Judge presiding.

COUNSEL OF RECORD: For Appellant: Donald A. Garrity, Helena, Montana For Respondent: William M. Kebe, Jr.; Johnson, Skakles & Kebe, Butte,Montana Gary L. Walton; Poore, Roth & Robinson, Butte, Montana

Filed: Submitted on Briefs: August 29, 1991 Decided: December 10, 1991

ClerkJustice R. C. McDonough delivered the Opinion of the Court.

Plaintiffsappeal fromvarious orders of theDistrict Court of the Third Judicial District, Deer Lodge County, in favor of defendants Cable MountainMine, Inc., andMagellanResources,Corp. We affirm. The issues on appeal are: 1. Whether the District Court erred in failing to impose sanctions against CableMountainMine Inc.,and Magellan Resources Corp., pursuant to Rule 11,M.R.Civ.P. 2. Whether The District Court erred in determining that no joint venture existed between Cable Mountain Mine, Inc., and Magellan Resources Corp. 3. Whether the District Court erred in granting a directed verdict dismissing the claims of William Inkret,Jr., M.D. Profit Sharing Trust. 4. Whether the District Court erred in instructing the jury

on laches at the request of the defendants. 5. Whether the District Court erred in refusing to instruct the jury on the language of 

### 5 82-2-221,MCA. Cable Mountain Mine, Inc. (Cable), is a Nevada corporation qualified to transact business in Montana since June 22, 1987. Cable operates a gold recovery operation at a placer mine near Cable Creek under a State permit. Magellan Resources Corp.

(Magellan), is a Montana corporation which owns patented and unpatented mining claims in the Southern Cross and Cable Mountain Mining Districts located in Deer Lodge County, Montana. At times pertinent to this lawsuit,Magellan conducted various methods ofexploration, including an active drilling program under an explorationpermit from the State. JackM. and CarolynM. Scanlon,William Inkret,Jr., M.D. P.C. Profit Sharing Trust,Richard and Mary Greenberg, and Richard and Roberta Urwiller are property owners in the Southern Cross area. Plaintiffs purchased their properties between 1972 and 1974. Plaintiffs1complaint alleged inverse condemnation, trespass, and nuisance. A trial commenced on December 4, 1989. At the close of plaintiffs' case in chief the District Court granted a directed verdict in favor of Cable and Magellan on the joint venture issue, and dismissed the claims ofWilliam Inkret, Jr.,M.D., P.C. Profit Sharing Trust. Subsequently, the jury rendered a verdict in favor of the defendants on the remaining issues. This appeal followed. I Whether the District Court erred in failing to impose sanctions against Cable and Magellan pursuant to Rule 11, M.R.Civ.P. The standard of review in regard to findings of fact in Rule 11cases isclearlyerroneous. TheDistrictCourt,having the feel of the case, will not be overturned unless its final judgment constitutes an abuse of discretion. DIAgostino 

### v. Swanson (1990), 240 Mont. 435, 446, 784 P.2d 919, 926. Plaintiffs maintain that Cable filed false answers to interrogatoriesregarding the alleged joint venture between Cable and Magellan. Further, plaintiffs allege that Cable answered falsely that the company was incorporated in 1984 when in fact itwas 1987. Plaintiffs also maintain that Cable refused to answer interrogatoriesregarding constructionandmaintenance ofa road in the Southern Cross area. In support of their position, plaintiffs produced a document at trial titled ItMemorandumof Agreementtf. The document was executed by North Lily Mining Company and JosephAidlin personally and as president of Cable Mountain Mine, Inc. The document provided thatNorth Lily reserved the right to transfer its rights and obligations to Magellan. No evidence was presented that this transfer ever took place, orthat a joint venture between Cable and Magellan ever came into fruition. At trial JosephAidlin testified that he did not incorporate Cable Mountain Mine, Inc. until March of 1987. Gary Walton, attorney for Cable, explained to theDistrictCourt thathedid not know the March 1987 date until the night prior to Aidlinfs testimony. Walton also argued that Cable did not refuse to answer the interrogatory but exercised its right to object. Plaintiffs subsequently filed a motion to compel which was denied. We conclude the District Court did not abuse its discretion when it declined to impose Rule 11 sanctions against Cable. Plaintiffs maintain that Magellan also made false and misleading representations in their answers to interrogatories. Magellan alleged it had no discussions with Cable regarding a joint venture between the two companies. Plaintiffs produced an unexecuted flMemorandum Agreementtt between NorthLilyMining Company and Magellan. The document allowed Magellan to acquire 100% of North Lily s interest in the Aidlin/North Lily ttMemorandum ofAgreement. l1 Further, the document provided that a joint venture would be executed lgassoon as practicablegg. The memorandum was

never executed. We conclude that the District Courtwas not clearly erroneous in its findings and did not abuse its discretion in declining to impose Rule 11 sanctions againstMagellan. I1 Whether the District Court erred indetermining that no joint venture existed between Cable Mountain Mine, Inc., and Magellan Resources Corp. As statedabove,plaintiffs failed toproduce evidence that a jointventure existed between Cable and Magellan. The standard of review for a directed verdict iswhether a reasonable person could draw different conclusions from the evidence. If only one conclusion is reasonably proper, then the directed verdict is proper. Davisv. Sheriff (1988), 234Mont. 126, 130, 762 P.2d 221, 223. The party opposing the motion must present substantial credible evidence to avoid a directed verdict. Davis at 129, 130, 762 P.2d at 224. Theplaintiffs failed toprovide evidence that a joint venture existed. Therefore, the District Court did not err indeterminingno joint venture existedbetween Cable andMagellan. I11 Whether the District Court erred in granting a directed verdict dismissing the claims of William Inkret,Jr., M.D. Profit Sharing Trust. The District Court found that the deeds presented at trial showed that William Inkret,Jr., M.D., P.C. Profit Sharing Trustdid not have an ownership interest in the property in question at the time of the alleged taking. Plaintiffs allege defendantsviolatedRule 9(a) M.R.Civ.P., by not raising thisdefense in their answer. Plaintiffsdid notmake this argument in opposing the motion at trial. We conclude the District Court did not err in granting defendantst directed verdicts on the dismissal of Inkretlsclaims. IV Whether the District Court erred in instructing the jury on laches at the request of the defendants. Plaintiffs1complaint alleged defendants1use of plaintiffs1 alleged road constituted a taking of their property. Defendants maintained, and the DistrictCourt found,the road in questionwas

a public road. Testimonypresented at trial revealed thatmining activity was present in the area in question historically, and, most recently, over the last tenyears. Additional evidence showed that Magellan actively explored for minerals in October 1986. Cable applied for amining permit in February of 1988. Plaintiffs did not comment on or opposeCable'sapplication during thecomment period. The State issued thepermit in July of 1988. Plaintiffs allege the date of the taking was in January of 1987. As stated above, the plaintiffs acquired their properties between 1972 and 1974.These are sufficient facts to conclude the DistrictCourt did not err in giving defendants1instruction on laches. 

## v Whether the District Court erred in refusing to instruct thejury on the language of 

### 3 82-2-221,MCA. Plaintiffsrequested an instructionbased on 

### 5 82-2-221, MCA, which provides in part that when the right of eminent domain is exercised for the purpose of open-pit mining, plaintiffs should purchase the property within 300 yards of the surface tract. No evidencewas presented at trial that eitherMagellan or Cable was engaged in open-pitmining. Therefore,the District Court did not err in refusing this instruction. Pursuant to Section 

### I,Paragraph 3(c), Montana Supreme Court 1988 InternalOperating Rules, this decision shallnot be cited as

a precedent and shall be published by its filing as a public document with the Clerk of this Court and by report of its result to the West Publishing Company. For the reasons stated above,we affirm the District Court.

We Concur: 

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Chief Justice