Opinion ID: 2612907
Heading Depth: 3
Heading Rank: 3

Heading: Challenges to the Upper Poorman Claims

Text: The trial court concluded that Tryck, as successor in interest to Shropshire, held full title to the Upper Poorman claims that Shropshire leased to Miscovich Brothers in 1955. Miscovich challenges this conclusion on two grounds,
At trial, Miscovich contended that Shropshire's 1955 lease of the Upper Poorman claims to Miscovich Brothers terminated by its own terms when mining first became uneconomical and ceased in 1958. Thus, Shropshire had no valid interest in the Upper Poorman claims when he purported to terminate the Miscovich Brothers lease in 1987. The trial court rejected this argument, finding that cessation of mining activity in 1958 did not terminate the lease, that the lease continued in effect until Shropshire notified Miscovich of its termination in 1987, and that Shropshire's notice of termination was justified, because Miscovich Brothers had continuously breached the lease at least since 1981 by failing to pay royalties and not mining the claims in a minerlike manner. Miscovich challenges these findings on appeal. He bases this challenge on the language of the lease, which provides that it would remain in effect until said claims are worked out unless sooner forfeited through violation of any covenant hereinafter contained to be performed by [Miscovich Brothers]. Miscovich argues that, when Miscovich Brothers ceased mining the Upper Poorman claims in 1958 because the claims were no longer profitable, the claims were in effect worked out. In support of this argument, Miscovich cites United States Smelting, Refining & Mining Co. v. Wigger, 684 P.2d 850 (Alaska 1984). Miscovich's reliance on Wigger is misplaced. The lease in Wigger provided that it was to remain in effect until all gold and other precious metals and minerals recoverable in the sole opinion of the Lessee at a profit shall have been recovered from the demised premises. Id. at 854 (emphasis added). Thus, the duration of the lease in Wigger expressly turned on the continued profitability of mining. By contrast, as the trial court in the present case correctly recognized, the duration of the Miscovich Brothers lease hinged on exhaustion of gold from the claims, not on continued profitability. By its own terms the lease was to remain in effect  barring a breach of its covenants  until the Upper Poorman claims were worked out. Although profitability did play a role in the covenants of the lease, that role related to Miscovich Brothers' duty to mine the claims actively, not to the duration of the lease. The lease covenants included the following: That [Miscovich Brothers] will mine said claims in a workmanlike manner in accordance with approved mining methods and will work all ground that can be mined at a profit. The effect of this covenant was to exempt Miscovich Brothers from abiding by the duty of mining in a workmanlike manner during periods when the claims could not be mined at a profit. Although making Miscovich Brothers' duty to mine the claims in a workmanlike manner contingent on profitability, this covenant had no effect on the duration of the lease; indeed, the provision assured that inactivity due to unprofitability could not be construed to violate the lease covenants. [4] The undisputed evidence at trial established that Miscovich Brothers ceased mining in 1958 due to economic factors related to the price of gold, and not due to the claims being worked out. [5] Under the circumstances, failure to continue active mining activities did not amount to a breach of the covenant of workmanlike mining and had no effect on the continued validity of lease. Cf. Black Star Coal Corp. v. Napier, 303 Ky. 778, 199 S.W.2d 449, 452 (Ky.App. 1947); Commercial Coal Mining Co. v. Big Bend Coal Mining Co., 293 Pa. 39, 141 A. 732, 734 (1928). Miscovich next argues that the superior court incorrectly found that Miscovich Brothers breached the lease covenants by failing to mine the claims in a workmanlike manner after 1981. However, testimony at trial established that although mining the Upper Poorman claims was not economically feasible for many years due to government control of gold prices, government restraints were relaxed in 1968 and by 1973 the price of gold was allowed to float freely on the open market. Testimony indicated that by 1979, the price of gold had increased fourfold from the previously fixed price of thirty-five dollars per ounce, and reached an astounding eight hundred dollars per ounce in the early 1980's. The increased price of gold made it possible to mine profitably in the Upper Poorman area once again. The superior court concluded that workmanlike miners would have drilled the site since at least 1981. This factual finding is supported by the evidence and is not clearly erroneous. It follows that the trial court correctly determined that Miscovich Brothers was in breach of the lease covenants beginning in at least 1981. Because the evidence further established that this breach continued throughout the remaining time that Miscovich held the lease, the trial court also properly determined that Shropshire had the right to terminate the lease in 1987.
Miscovich also argues that, even if the trial court correctly found that the lease on the Upper Poorman claims remained valid in 1987 and that Miscovich Brothers' failure to mine the claims after 1981 amounted to a breach, the court should have concluded that Shropshire's effort to terminate the lease was barred by the doctrines of waiver, estoppel and/or laches. Miscovich maintains that invocation of these doctrines was justified by Shropshire's failure to take prompt action to enforce the lease covenants. Under Alaska law, waiver is generally defined as the intentional relinquishment of a known right. Milne v. Anderson, 576 P.2d 109, 112 (Alaska 1978); Arctic Contractors, Inc. v. State, 564 P.2d 30, 40 (Alaska 1977). Waiver may be accomplished implicitly if the actor's conduct evidences an intention to waive a right, or ... [if] neglect to insist upon the right results in prejudice to another party. Milne, 576 P.2d at 112. For an implied waiver to arise, however, there must be direct, unequivocal conduct indicating a purpose to abandon or waive the legal right[.] Id. Without knowledge of a right or claim, a party cannot be said to have waived it. Nat'l Bank of Alaska v. J.B.L. & K. of Alaska, Inc., 546 P.2d 579, 587 (Alaska 1976). The issue of whether a waiver occurred involves a question of fact; a trial court's finding on the issue will be set aside on review only if clearly erroneous. Fun Products Distributors, Inc. v. Martens, 559 P.2d 1054, 1058 (Alaska 1977); Alaska R.Civ.P. 52(a). The superior court found that Shropshire did not waive his right to terminate the lease based upon Miscovich Brothers' breach. The record indicates that Shropshire received information that Miscovich Brothers was working the mining claims as late as August 2, 1982, when John Miscovich told him that Miscovich had been working in Poorman over the years. Thereafter, Shropshire had no occasion to learn of Miscovich's continuing breach until he spoke with Tryck in 1986. Under the circumstances, the trial court's finding that Shropshire's inaction did not constitute a waiver was not clearly erroneous. Similarly, we find no error in the trial court's refusal to apply the doctrines of estoppel and laches to bar Shropshire's termination of the lease. Equitable estoppel requires the assertion of a position by conduct or word, reasonable reliance thereon by another party, and resulting prejudice. Dressel v. Weeks, 779 P.2d 324, 329 (Alaska 1989) (quoting Jamison v. Consolidated Util., Inc., 576 P.2d 97, 102 (Alaska 1978)). The proponent of equitable estoppel bears the burden of proving each element. See Dressel, 779 P.2d at 329. The trial court found that Miscovich failed to meet his burden of proof as to any of the requisite elements of equitable estoppel, because Miscovich adduced no evidence of representations by Shropshire that might have justified reasonable reliance, no evidence of actual reliance on the part of Miscovich, and no evidence of resulting prejudice. See Jamison, 576 P.2d at 102; Arctic Contractors, 564 P.2d at 40. The record discloses no basis for concluding that these findings are clearly erroneous, and Miscovich suggests none. We affirm the superior court's finding that equitable estoppel does not apply here. The equitable defense of laches applies when the trial court finds unreasonable delay in the plaintiff's assertion of a claim and resulting prejudice to the defendant. Wolff v. Arctic Bowl, Inc., 560 P.2d 758, 767 (Alaska 1977); Concerned Citizens of South Kenai Peninsula v. Kenai Peninsula Borough, 527 P.2d 447, 457 (Alaska 1974). Both elements, unreasonable delay and prejudice, must be established before the defense is invoked. Wolff, 560 P.2d at 767; Southern Pacific Co. v. Bogert, 250 U.S. 483, 488-89, 39 S.Ct. 533, 535-36, 63 L.Ed. 1099 (1919). The decision to sustain a defense based on laches is properly addressed to the discretion of the trial court, and will not be overturned unless we feel a definite and firm conviction that a mistake has been committed. Pavlik v. State, 637 P.2d 1045, 1047 (Alaska 1981). The superior court found that Miscovich Brothers' breach occurred around 1981. The record indicates that Shropshire became aware of the breach in 1985 or 1986 and promptly terminated the lease in 1987. Tryck brought this action to quiet title in April 1989. The breach continued throughout this period, and Miscovich presented no evidence at trial to establish prejudice resulting from any delay. Under the circumstances, the record supports the superior court's findings that there was no lack of diligence or unreasonable delay in bringing the action, and that Miscovich suffered no prejudice during the time period 1982 to 1987. These findings are not clearly erroneous. In sum, we affirm the trial court's refusal to apply waiver, estoppel, and laches to bar Shropshire's right to terminate the lease in 1987 based upon Miscovich Brothers' breach, and we conclude that the court properly awarded Tryck sole title to the Upper Poorman claims.