NO. 90-527 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1991 

JAMES DeMERS and DORIS DeMERS; 

PHILIP J. POSTON and SHIRLEY M. POSTON; 

EDWARD J. SMOSMA, THELMA RUTH SMOSMA; J$-7 7 FJ3 

CLYDE I. LAUFER and ALTA LAUFER, p-4 , j *pi Yr& 

$4 3 & j; -ct, " '. Y L4-J -A Plaintiffs and Appellants, 

1 I. 

r' i ' LLL ->i?ls"iA RONCOR, INCORPORATED, CLERK btr $i~i~i~:.~'ilf CQUH, 

57 ATE OF hlr3itl~~h-d~ 

~efendant and Respondent. 

APPEAL FROM: District Court of the Tenth Judicial District, 

In and for the County of Judith Basin, 

The Honorable Peter L. Rapkoch, Judge presiding. 

COUNSEL OF RECORD: 

For Appellants: 

James T. Harrison, Jr.; Harrison, Loendorf & Poston, 

P.C., Helena, Montana 

For Respondent: 

William P. Driscoll and Ward A. Shanahan; Gough, 

Shanahan, Johnson & Waterman, Helena, Montana 

Filed: 

Submitted on Briefs: April 25, 1991 

Decided: July 2, 1991 
Justice Karla M. Gray delivered the Opinion of the Court. 

The appellants, owners of lots in a subdivision known as 

Sapphire Village, appeal from the Opinion and Order of the District 

Court of the Tenth Judicial District, Judith Basin County, granting 

the respondent's motion to dismiss. We affirm. 

The appellants raise three issues on appeal: 

1. Whether the respondent is judicially estopped from barring 

the appellants access to hand mine on respondent's sapphire mining 

claims. 

2. Whether the issues in a prior federal court case were 

identical to the issues raised in the case at bar, such that this 

litigation is barred by res judicata. 

3. Whether the interests of justice allow res judicata to be 

applied under the circumstances of this case. 

The appellants are lot owners in Sapphire Village, a 

subdivision outside Utica, Montana. The respondent, a California 

corporation, is the owner of the vlYogo Sapphirevv bearing dike west 

of Sapphire Village. The I1Yogo Dikevv is a geological formation 

containing deposits of sapphire-bearing ore. Sometime in 1968, the 

respondent's predecessor in interest, Sapphire Village, Inc., 

subdivided the real property it owned adjacent to the Yogo Dike 

into lots ranging from 10,000 square feet to approximately onethird of an acre. The appellants purchased these lots during the 

1969 through 1981 time period from Sapphire Village, Inc. or its 

successor in interest, Roncor, Inc., the respondent herein. 

Prior to the sale of the lots, Sapphire Village, Inc., filed 
a public IrDeclaration of Restrictive Covenants, Reservations, 

Restrictions, and Grant of Mining PermitR1 and recorded the same in 

Judith Basin County, Montana. The Declaration stated that the 

covenants were to run with the land; the appellants purchased their 

respective lots subject to these covenants. The Grant of Mining 

Permit provided that each of the lot owners had the right to "hand 

digt1 for sapphires in designated areas on five specified patented 

lode mining claims on the Yogo Dike. These five claims were all 

located in Section 23. 

On April 1, 1980, sapphire village, Inc., which had since 

merged into the corporate entity of Sapphire ~nternational 

Corporation,' conveyed its interest in the mining claims it owned 

on the Yogo Dike to a Colorado company known as Intergem. 

Commencing in 1982, Intergem engaged in extensive mining activities 

which included strip mining of the five mining claims that were the 

subject of the Grant of Mining Permit. 

In August, 1988, the appellants brought a class action suit 

for damages, contending that Roncor had breached the terms of the 

Declaration and Grant of Mining Permit when it conveyed to Intergem 

the right to commercially mine the Yogo Dike. The suit was tried 

to a jury in February, 1990, in federal district court. The major 

issue presented was whether or not Roncor had breached the terms 

of the Declaration and Grant of Mining Permit. The appellants 

contended that the Grant of Mining Permit gave them an exclusive 

' In 1986, Sapphire International Corporation changed its 

corporate name to Roncor, Inc. 
right to mine. Roncor, however, maintained that the appellants 

held only a non-exclusive right to mine and that there existed an 

independent right to commercially mine the claims which was 

expressly reserved to Sapphire Village, Inc. and its successors in 

interest. The jury returned a verdict in favor of the appellants 

and awarded damages for the loss of the mining rights. Judgment 

was entered accordingly. 

During that trial, Ronald Kunisaki, president of Roncor, gave 

certain testimony that the appellants contend produced a new cause 

of action. The appellants filed their complaint in this matter on 

June 8, 1990, seeking damages for interference with certain hand 

digging mining rights and an injunction to prevent future 

interference with these rights. The District Court issued its 

Opinion and Order on August 23, 1990, in which it granted the 

respondent's motion to dismiss the complaint. The District Court 

held that the appellants had already been awarded damages for the 

"total defeat" of their digging rights and that this action was 

barred by res judicata. The appellants appeal. 

The first issue raised by the appellants on appeal is whether 

the respondent is judicially estopped from barring access by the 

appellants to hand mine on the respondent's mining claims. 

During the prior federal trial between these parties, Ronald 

Kunisaki testified that, although the covenant attached to the five 

claims located in Section 23, it was his view that Roncor could in 

its discretion designate other areas as substitutions for the 

Section 23 claims. A portion of his testimony was as follows: 

Q: [By Mr. Harrison] . . . Have you transferred any 

4 
permanent rights to hand diggers to dig anywhere except 

in Section 23? 

A: [By Mr. ~unisaki] Yes, by virtue of the covenants. 

Q: And can you tell me from the covenants, then, and 

from your testimony, where that permanent right allows 

them to dig? 

A: The covenants, as I interpret them, give them the 

permanent right to hand dig on designated areas, so they 

do have a permanent right to dig on those designated 

areas. 

Q: And the, your interpretation of that is that you can 

tell them anywhere within the mine? 

A: Correct. 

The appellants contend that this testimony demonstrates that 

the respondent's position during the federal trial was that the 

appellantsr hand mining rights were permanent and mine-wide. They 

argue that, under the principle of judicial estoppel, the 

respondent is now prevented from treating the appellants' mining 

rights as anything but permanent and mine-wide. 

Following the close of the federal trial, the respondent 

advised all members of the plaintiff class by letter that any 

mining rights they had previously owned by way of the Grant of 

Mining Permit were cancelled and had reverted to Roncor, Inc. The 

appellants argue that the respondent is judicially estopped from 

changing its position held at trial and cannot now cancel the 

appellantst mine-wide mining rights. The only mining rights they 

should lose, the appellants argue, are the five claims in Section 

Judicial estoppel is generally defined as the rule that a 

party is bound by his or her judicial declarations and may not 
contradict them in a subsequent action or proceeding. 28 

Am.Jur.ad., Estoppel and Waiver, 5 71, pgs. 700-701, (1966). The 

elements required to support judicial estoppel are as follows: (1) 

The party being estopped must have knowledge of the facts at the 

time the original position is taken; (2) the party must have 

succeeded in maintaining the original position; (3) the position 

presently taken must be actually inconsistent with the original 

position; and (4) the original position must have misled the 

adverse party so that allowing the estopped party to change its 

position would injuriously affect the adverse party. Colwell v. 

City of Great Falls (1945), 117 Mont. 126, 157 P.2d 1013 (overruled 

on other grounds). The rule of judicial estoppel does not apply 

to a change of position regarding matters of law, nor does it apply 

where the knowledge or means of knowledge of both parties is equal. 

Colwell, 117 Mont. at 139, 157 P.2d at 1019. 

In the case at bar, the appellants allege that Kunisakits 

testimony served to define the appellantst mining rights as 

including claims other than those provided for in the Grant of 

Mining Permit. However, the testimony in question constituted only 

Kunisakits own interpretation of the terms of the Declaration and 

Grant of Mining Permit. The true legal interpretation of the Grant 

of Mining Permit is unchanged and remains as stated: the five 

claims in section 23. Kunisaki's testimony did not create any new 

or additional rights to which the appellants are entitled. 

Kunisaki's testimony amounted to an attempt to persuade the 

jury to interpret the written instrument in such a way that would 

likely benefit Roncor in the lawsuit. The jury returned a verdict 
in favor of the appellants, indicating that it was unpersuaded by 

Kunisakils interpretation of the instrument. 

As the United States Supreme Court stated in Sturm v. Boker 

(1893), 150 U.S. 312, 336, 14 S.Ct. 99, 107, 37 L.Ed. 1093, 1102, 

where a position taken in a judicial proceeding is found to be the 

expression of an opinion as to the law of a contract, and not a 

declaration or admission of a fact, a party is not estopped from 

subsequently taking a different position as to the true 

interpretation of the written instrument. The District Court 

correctly found that Kunisakils testimony merely offered an 

interpretation of the written instrument and created no additional 

mining rights for the appellants. Kunisakils change of position 

regarded a matter of law and, consequently, judicial estoppel does 

not apply. 

Even if we were to assume Kunisakils testimony amounted to a 

factual declaration, the elements of judicial estoppel as set forth 

above have not been met. Roncor failed to maintain its original 

position and, although acquiring a judgment in its favor is not 

always necessary to satisfy this element, the party against whom 

the estoppel is sought must have at least been successful in 

arguing its original position against the party asserting the 

estoppel. The appellants contend that Roncor was in fact 

successful in this regard. It is the appellants' position that 

Kunisakits testimony influenced the jury to award less damages than 

it would otherwise have awarded. This arg'ument, however, is merely 

speculative conjecture as to the jury's inner thought process and 

is factually unsupported. 
Moreover, the appellants have failed to demonstrate in what 

manner, if any, they have been misled by Kunisakivs testimony. In 

any event, allowing Roncor to take the position that all 

appellantsv mining rights have been terminated does not injuriously 

affect the appellants, because the appellants already have been 

compensated for their loss. 

The District Court is correct in its conclusion that judicial 

estoppel is not applicable to the facts of this case. 

The remaining two issues concern the principles of res 

judicata and will be discussed together. 

The appellants argue that res judicata cannot be applied in 

this case for two reasons. First, they contend that all the 

necessary elements are not present. Second, they argue that even 

if the respondent has satisfied all the elements, res judicata 

should not be applied for reasons of fundamental justice. 

The four element test we apply in determining whether or not 

a second action is barred by res judicata is as follows: the 

parties or their privies must be the same; the subject matter of 

the action must be the same; the issues must be the same; and the 

capacities of the persons must be the same in reference to the 

subject matter and to the issues between them. Baertsch v. County 

of Lewis and Clark (1986), 223 Mont. 206 at 209-210, 727 P.2d 504 

at 506. The only element in dispute is whether the prior federal 

action involved the same issues as are presented in the case at 

bar. 

The appellants argue that the issue presented to the jury in 

the federal case was the question of damages due the appellants as 
a result of the loss of the one mile portion of mining rights on 

Section 23; in other words, the loss is characterized as a partial 

loss. They contend that the issue now before the Court concerns 

the remaininq mininq riqhts referred to in Kunisakivs earlier 

testimony; now characterized as a complete loss. This distinction 

is entirely hypothetical. The Grant of Mining Permit provided the 

appellants with mining rights on the one mile portion of Section 

23 and nothing more. The Ifadditional rightsv1 purportedly created 

by Kunisakils testimony which the appellants now attempt to 

litigate are nonexistent. ~otwithstanding the Itpartial loss/ 

complete lossvv distinction the appellants attempt to make above, 

we find the issue presented in the federal case to be identical 

with the one presented at bar. 

The appellants attempt to create rights that never existed 

under the Grant of ~ining permit and then litigate those 

nonexistent rights. As we have previously stated, ~unisakils 

testimony did not amount to the creation of additional mining 

rights. The only mining rights that have ever existed are those 

on Section 23, and they were the subject of the prior federal 

action. The mining rights at issue in the federal action that the 

appellants attempt to characterize as a partial loss, were in fact 

a complete loss. Therefore, the "complete loss of mining rightsv1 

issue they are attempting to litigate in this case does not exist 

and the Ivpartial lossIv (which was actually the complete loss) has 

been disposed of in the federal action. 

The appellants argue that this Court, for reasons of 

fundamental justice, should not apply res judicata even if 
identical issues are involved in the first and second actions. It 

is their contention that it would be Iga grave injusticegg to prevent 

the appellants from seeking relief for the loss of mining 

rights. Again the appellants are assuming that they have mining 

rights in addition to those provided in the Grant of Mining Permit. 

This is not the case. There is no injustice in preventing the 

appellants from seeking damages for the loss of rights they never 

had. 

We hold that judicial estoppel is not proper under the facts 

of this case and, as such, this case is barred by res judicata. 

Affirmed. 

We concur: 

Justices 
Justice Terry N. ~rieweiler dissenting. 

I concur with that part of the majority's opinion which 

concludes that the principle of judicial estoppel is not applicable 

to the defendant's conduct. 

I dissent from that portion of the majority's opinion which 

concludes that the present action by the plaintiffs is barred by 

res judicata . 

As has been correctly pointed out in the majority opinion, 

before res judicata bars a second action the subject matter and the 

issues must be found to be the same as in a prior action. However, 

in this case, neither the subject matter nor the issues were the 

same. 

In the action filed by the plaintiffs in August 1988, they 

sought damages for interference with their hand mining rights 

located in Section 23 of the Yogo Mine. The entire basis for their 

claim was the following allegation: 

The transfer of ownership of the mining claims to 

Intergem, Inc.,, by the defendant for the purpose of 

commercially mlning the Yogo Sapphire-bearing dike, and 

the subsequent commercial mining of the Yogo Sapphirebearing dike, totally defeated the right and privilege 

that Plaintiffs had to hand dig in the aforesaid mining 

claims, namely, the Clayberg, Gunn, Hoover, Baker, and 

Snowdrift, located in Section 23. 

The only section for which damages were sought in the prior 

action was described as follows in the prayer for relief filed in 

that case: 
WHEREFORE, Plaintiffs request for themselves and all 

members of the class that the Court: 

2. Adjudicate and declare the rights of the class 

members to damages for loss of hand digging rights in the 

Yogo Sapphire ditch in Section 23, as set forth in this 

complaint . . . . 

In their original suit, plaintiffs sought no damages for loss 

of mining rights in any other section of the Yogo Mine. 

In the complaint which commenced this action, plaintiffs 

sought a declaratory judgment determining their mining rights in 

the other sections of the Yogo Mine. Their complaint specifically 

alleged as follows: 

13. That this suit is brought to obtain declaratory 

judgment under the Uniform Declaratory Judgments Act 

(§ 27-8-101, et seq., MCA) to declare and adjudge the 

following: 

(a) that the hand digging rights of the Plaintiffs 

herein are applicable under the provisions of the 

covenants to all six sections of the Yogo Mine .... 

Furthermore, the prayer for relief in this action sought 

entirely different relief than was sought in the prior action. It 

sought the following relief: 

WHEREFORE, Plaintiffs pray for the following relief: 

2. For a declaratory judgment finding and determining 

that Plaintiffs' hand digging rights, subject to the 

terms of the covenants, are mine-wide throughout the Yogo 

mine, and applicable to all six sections of the Yogo mine . . . . 
Since plaintiffs' first cause of action sought damages for 

interference with their mining rights in only Section 23, and since 

plaintiffs1 second cause of action sought a determination of their 

hand mining rights in all other sections of the Yogo Mine, neither 

the subject matter nor the issues to be resolved by the court were 

identical. Therefore, this was not an appropriate situation for 

the application of the doctrine of res judicata. 

The majority opinion, while affirming the District Court on 

the basis of res judicata, concludes that it makes no difference that 

plaintiffs1 second claim claims different mining rights than those 

claimed in the first action. The majority concludes, as a matter 

of law, based on its interpretation of the covenants between the 

parties, that plaintiffs did not have any mining rights in any 

section other than Section 23. However, that issue was never 

decided by the District Court; and, the plaintiffs have never had 

the opportunity to present evidence in support of their claim to 

rights outside Section 23 because their claim was summarily 

dismissed, based on the principle of res judicata. 

The majority has simply made a factual finding based upon its 

review of the record without ever giving the plaintiffs an 

opportunity to supplement the record during an evidentiary hearing. 

That is not the function of this Court. Therefore, I dissent from 

the majority opinion. I would reverse the District Court's grant 

of summary judgment (although it was not denominated as such), and 
remand this case to the trial court for further proceedings to 

determine the merits of plaintiffs' claim that they have mining 

rights in other sections of the Yogo Mine.